IMF Executive Board Reviews Proposal to Update the Monetary and Financial Policies Transparency Code
IMF News, May 13, 2019
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- Published: May 13, 2019
Background and Rationale
- On April 29, 2019, the Executive Board of the International Monetary Fund (IMF) discussed a staff paper proposing to replace the Monetary and Financial Policies Transparency (MFPT) Code with a new Central Bank Transparency (CBT) Code.
- The update is in line with the recommendations of the 2017 Joint Review of the Standards and Codes Initiative, indicating the need for risk-based assessments to support policy effectiveness and address macroeconomic risks.
- Rationale for change:
- Remove overlap in the MFPT with transparency elements of financial policies covered by other international standards.
- Expand central bank transparency standard to a broader set of activities undertaken by many central banks since the Global Financial Crisis (GFC), including changes in monetary policy practices.
Scope and Design of the Proposed CBT
- Key design features:
- Modular, risk-based, and proportional setup to account for country-specific circumstances.
- Applicability to all IMF members, including less-developed economies.
- Orientation toward risk-based assessments to support policy effectiveness and address macroeconomic risks.
- Intended uses:
- Serve as a tailored diagnostic tool in IMF capacity development.
- Support IMF surveillance such as Article IV reviews and Financial Sector Assessment Programs.
- Be useful in an IMF Program context, as was the case for the MFPT.
Executive Board Assessment
- Press Release No. 19/163; discussion dated April 29, 2019; release dated May 13, 2019.
- Summary of Directors’ views:
- Welcomed consideration of the staff proposal to update the MFPT Code and endorsed replacing the MFPT with the CBT.
- Viewed the proposed CBT as appropriate to remove overlap with other FSB standards and to expand transparency standards reflecting post-GFC central bank activities.
- Supported reorienting transparency standards to facilitate risk-based assessments in line with the 2017 Joint Review.
- Emphasized that the CBT should be relevant for all member countries, including less‑developed and smaller economies.
- Agreed that the modular approach would help facilitate a risk‑based and proportional application taking into account country‑specific circumstances and needs.
- Broad concurrence that CBT can serve as a diagnostic tool in capacity development and help central banks map their transparency frameworks.
- Many Directors considered CBT assessments could help support Fund surveillance.
- Some Directors underscored the importance of clarifying the voluntary nature of the CBT.
- Directors’ procedural expectations:
- Asked for broader consultation on the proposed CBT, including with monetary authorities, other international institutions, and the Executive Board.
- Requested more regular updates to the Executive Board as the CBT is developed.
- Note on qualifiers:
- An explanation of any qualifiers used in the summing up can be found here: https://www.imf.org/external/np/sec/misc/qualifiers.htm.
Governance, Confidentiality, and Balance
- Directors welcomed that the CBT will take as given the mandates, policies, and governance arrangements of central banks.
- Clarifications:
- The CBT will not provide a central bank governance framework, nor is it a means to assess or pass judgement on the governance of central banks.
- Trade-offs highlighted:
- Central banks face trade‑offs between transparency and the legitimate need for confidentiality.
- The CBT should strike an appropriate balance between transparency and confidentiality, preserving flexibility for market-sensitive information and financial stability and policy effectiveness objectives.
Advisory Group and Consultations
- Directors supported convening an international Advisory Group to provide guidance to staff in elaborating the new code.
- Expectations for the Advisory Group:
- Members should be selected from diverse backgrounds and regions to ensure broad representation of views and experiences.
Administrative and Contact Information
- Press Release date: May 13, 2019.
- Press office contact:
- PRESS OFFICER: Meera Louis
- Phone: +1 202 623-7100
- Email: MEDIA@IMF.org
IMF Executive Board Reviews Proposal to Update the Monetary and Financial Policies Transparency Code — Press Release No. 19/163, May 13, 2019
