## Central Banks Must Enhance Transparency to Build Trust

_IMF Blog, March 23, 2023_

## Source details

**Canonical URL:** [Central Banks Must Enhance Transparency to Build Trust](https://www.imf.org/en/blogs/articles/2023/03/23/central-banks-must-enhance-transparency-to-build-trust)

## Other formats

- [Markdown version](/en/blogs/articles/2023/03/23/central-banks-must-enhance-transparency-to-build-trust/index.md)
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## Bibliographic details
- Authors: Tobias Adrian, Jihad Alwazir, Ashraf Khan, Dmytro Solohub
- Published: March 23, 2023

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### Context and purpose
- Publication date: March 23, 2023.
- Authors: Tobias Adrian, Jihad Alwazir, Ashraf Khan, Dmytro Solohub.
- Motivation: Economic and financial turbulence and rising interest rates increase stakeholder scrutiny and calls to limit central bank autonomy; transparency and accountability are essential to maintain public trust, safeguard independence, and enhance policy effectiveness.

### Key points and principles
- “Independence demands transparency.” — Stefan Ingves (quoted from a January interview).
- Many laws already include explicit transparency provisions, especially for monetary policy, as evidenced by the IMF’s Central Bank Legislation Database.
- In 2020 the IMF Executive Board adopted a new voluntary Central Bank Transparency Code covering mandates, functions, and operations.
- The IMF offers voluntary transparency reviews for central banks based on the Transparency Code to assess practices and promote better communication and accountability.

### Pilot review coverage and focus areas
- Central banks reviewed to date: Canada, Chile, Morocco, North Macedonia, Seychelles, Uganda, and Uruguay.
- Reviews covered: governance, policies, operations, outcomes, and relations with other official stakeholders (such as government and financial regulators).
- Reviews aim to:
  - Gauge transparency and accountability.
  - Facilitate more effective communication and better-informed dialogue with lawmakers, investors, and the public.
  - Detail central bank performance and compliance with mandates.
  - Help adjust communication tools, channels, and messages to the needs of targeted audiences, reducing uncertainty and contributing to better policy choices.

### Selected outcomes and reactions from reviewed central banks
- Bank of Canada: published a detailed summary of its Governing Council deliberations for the first time, joining nearly two dozen other central banks that regularly release detailed information on monetary policy decisions.
- Central Bank of Chile: approved a new transparency policy based on the IMF’s review and created a special section on its website to provide additional information on operations.
- Central Bank of Seychelles: began publishing a Monetary Policy Report.
- National Bank of the Republic of North Macedonia: disclosed audit and risk management details.
- Morocco, Seychelles, and Uganda: used review findings to develop institutional communication strategies and strengthen communication units.
- IMF post-pilot survey finding (paraphrased from central bank official): reviews help “build more effective and client-driven communication systems” and raise staff awareness about clearer and more understandable communications.

### Policy implications and next steps
- As challenges mount, improving transparency is critical to preserve independence and policy effectiveness.
- Future transparency reviews will be available to all IMF members as a voluntary tool to improve transparency and accountability.
- The IMF will build a repository of transparency practices, based on information documented during the reviews, to facilitate peer-learning among staff at different central banks.
- Expected benefits: reinforce trust in central banks, and strengthen their credibility and effectiveness in an increasingly complex world.

*Source: IMF blog post titled "Central Banks Must Enhance Transparency to Build Trust", March 23, 2023.*

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## References

- [Central Bank Legislation Database](https://intapps.imf.org/depts/mcm/cbld/default.aspx)
- [adopted](https://www.imf.org/en/Blogs/Articles/2020/07/30/blog-transparency-makes-central-banks-more-effective-trusted)
- [Canada](https://www.imf.org/en/Publications/CR/Issues/2022/09/27/Canada-Central-Bank-Transparency-Code-Review-523935)
- [Chile](https://www.imf.org/en/Publications/CR/Issues/2021/06/16/Chile-Central-Bank-Transparency-Code-Review-50208)
- [Morocco](https://www.imf.org/en/Publications/CR/Issues/2022/12/19/Morocco-Central-Bank-Transparency-Code-Review-527115)
- [North Macedonia](https://www.imf.org/en/Publications/CR/Issues/2022/01/28/Republic-of-North-Macedonia-Central-Bank-Transparency-Code-Review-512338)
- [Seychelles](https://www.imf.org/en/Publications/CR/Issues/2022/09/27/Seychelles-Central-Bank-Transparency-Code-Review-523940)
- [Uganda](https://www.imf.org/en/Publications/CR/Issues/2023/02/14/Uganda-Central-Bank-Transparency-Code-Review-IMF-Country-Report-No-529812)
- [Uruguay](https://www.imf.org/en/Publications/CR/Issues/2022/07/21/Uruguay-Central-Bank-Transparency-Code-Review-521102)
- [policy paper](https://www.imf.org/en/Publications/Policy-Papers/Issues/2023/03/15/The-Central-Bank-Transparency-Code-Findings-Of-The-Pilot-Reviews-530926)

_Source: https://www.imf.org/en/blogs/articles/2023/03/23/central-banks-must-enhance-transparency-to-build-trust_