## Introduction

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### Purpose and scope of the Central Bank Transparency Code (CBT)
- The CBT is an international code that allows central banks and their stakeholders to map transparency practices of the central bank to international best practices.
- Purpose: to enhance transparency and accountability of the central bank and contribute to policy effectiveness.
- The CBT is not intended as a governance code.
- The CBT is voluntary and applies only to central banks.
- When a central bank shares a function with other agencies, transparency of those agencies is not subject to the CBT.
- When a central bank is part of a monetary union, the CBT should be applied at both the level of the monetary union and of each national central bank where functions are delegated.

### Rationale for updating the 1999 code
- An update of the IMF’s 1999 “Code of Good Practices on Transparency in Monetary and Financial Policies” (MFPT) was overdue because of:
  - advances in international financial policy standards since 1999;
  - monetary policy practices of many central banks since the 2008 financial crisis;
  - the broadening of mandates, Functions, and Powers—both de jure and de facto—of central banks in recent years;
  - the 2017 IMF “Review of the Standards and Codes Initiative” recommendation to gear the Fund’s transparency guidance toward facilitating the implementation of policy Objectives;
  - the Fund’s enhanced approach to good governance issues.
- On April 29, 2019, the Executive Board of the IMF endorsed a staff proposal to replace the 1999 MFPT with the new Central Bank Transparency Code (CBT).

### Changing central bank practices and challenges
- Events influencing central banking transparency and mandates:
  - the 2008 financial crisis;
  - the COVID-19 pandemic.
- Consequences and developments:
  - central banks expanded balance sheets significantly and often used unconventional monetary policies to support price stability Objectives.
  - central banks increasingly have a financial stability Mandate informing monetary policy actions.
  - Monetary Policy Instruments have expanded; financial stability Functions have broadened to include macroprudential oversight, crisis management, and resolution.
  - some central banks assume responsibilities such as anti-money laundering/countering the financing of terrorism (AML/CFT) supervision and Consumer Protection.
- Transparency remains critical to guiding decisions of economic agents, stabilizing market expectations and conduct, ensuring public accountability, and underpinning central bank Autonomy/Independence.

### Design features and orientation of the CBT
- The CBT is a comprehensive set of principles and practices that apply to all central banks, regardless of mandates, governance frameworks, and institutional arrangements.
- The CBT’s approach:
  - geared toward facilitating the implementation of policy Objectives to support policy effectiveness and address macroeconomic risks;
  - recognizes diverse circumstances and levels of economic and financial development;
  - facilitates reviews that are outcome-focused, modular, risk-based, and proportional.
- The CBT allows central banks to:
  - review existing transparency frameworks against a range of practices;
  - articulate transparency choices shaped by domestic legal frameworks;
  - facilitate dialogue with stakeholders on governance, policy, operations, outcome, and official relations;
  - explain what the central bank does, how it does it, and what the results are, thereby improving accountability and informing future policy choices.

### Balance between transparency and confidentiality
- The CBT recognizes that transparency cannot be indiscriminate or excessive because many central bank activities legitimately require confidentiality.
- Confidentiality is pertinent for market-sensitive information, financial stability considerations, and personal data—key areas include foreign exchange interventions, reserve management, supervisory decisions on individual institutions, and emergency liquidity assistance.
- Two-pronged approach to confidentiality under the CBT:
  a. Transparency requirements throughout the CBT are qualified for market sensitive information, financial stability considerations, and personal data.
  b. Central banks should articulate a clear confidentiality policy to explain and justify their disclosure choices and legal obligations.
- The CBT stresses transparency of central banks’ legal frameworks, which shape the degree of transparency (e.g., personal data protections, commercial or trade secrecy provisions, or “freedom of information” laws).

### Boundaries and exclusions
- The CBT will not review central bank Functions like micro-prudential supervision (banking or insurance), securities regulation, resolution, or financial market infrastructure responsibilities—these areas already have established international standards.
- The Annex contains selected excerpts from these standards related to transparency for informational purposes only and is not to be used for reviewing central banks’ transparency practices in those sectors.

### Structure of the CBT
- The CBT comprises five “Transparency Pillars”:
  - Pillar I. Transparency in governance, covering institutional issues.
  - Pillar II. Transparency in policies, including its framework and decision-making process.
  - Pillar III. Transparency in operations, highlighting how policy decisions are implemented.
  - Pillar IV. Transparency in outcome, focusing on how the outcome of central bank policies and other actions are reported to stakeholders to facilitate accountability.
  - Pillar V. Transparency in official relations, covering central bank interactions with the government and other domestic agencies, and international relations and commitments.
- Organization of the CBT document:
  - Section A: CBT principles.
  - Section B: descriptions of a range of practices, broken down by principle.
  - Section C: Glossary with key definitions.
  - Annex: selected transparency-related principles from international financial policy standards (informational only).

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## References

- [Principles](https://www.imf.org/en/Data/CBT/principles)
- [Practices](https://www.imf.org/en/Data/CBT/practices)
- [Annex](https://www.imf.org/en/Data/CBT/annex)

_Source: https://www.imf.org/en/data/cbt/introduction_