An Index for Transparency for Inflation-Targeting Central Banks: Application to the Czech National Bank
IMF Working Papers, September 28, 2018
Source details
- Canonical URL
- An Index for Transparency for Inflation-Targeting Central Banks: Application to the Czech National Bank
Other formats
Bibliographic details
- Authors: Rania A. Al-Mashat, N. Nergiz Dinçer, Tibor Hlédik, Tomás Holub, Asya Kostanyan, Douglas Laxton, Armen Nurbekyan, Rafael A Portillo, Hou Wang
- Published: September 28, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484374832.001
Overview
- This paper develops a new central bank transparency index for inflation-targeting central banks (CBT-IT index).
- It applies the CBT-IT index to the Czech National Bank (CNB), described as one of the most transparent inflation-targeting central banks.
- The CNB has invested heavily in developing a Forecasting and Policy Analysis System (FPAS) to implement a full-fledged inflation-forecast-targeting (IFT) regime.
- All three components of the CBT-IT index (see below) have shown substantial improvements over time for the CNB, but a few gaps remain. The CNB is currently working on eliminating some of these gaps.
CBT-IT Index Components
- Measures of transparency about monetary policy objectives.
- Measures of the Forecasting and Policy Analysis System (FPAS) designed to support inflation-forecast-targeting (IFT).
- Measures of transparency regarding the monetary policymaking process.
Application to the Czech National Bank (CNB)
- The CNB is presented as a case study for the CBT-IT index.
- Emphasis on the CNB’s development and use of FPAS to support implementation of an IFT regime.
- The assessment identifies substantial improvements across all three CBT-IT components, alongside remaining gaps that the CNB is addressing.
Key Findings
- Development: The CBT-IT index was developed specifically for inflation-targeting central banks.
- CNB performance: The CNB shows substantial improvements across transparency measures over time.
- Gaps: Despite improvements, a few gaps in transparency remain at the CNB.
- Ongoing work: The CNB is working on eliminating some of these remaining gaps.
Policy Implications and Recommendations
- Strengthen transparency about monetary policy objectives.
- Enhance disclosure and robustness of the FPAS supporting IFT.
- Improve openness of the monetary policymaking process to address identified gaps.
- Continue efforts to close remaining transparency gaps identified by the CBT-IT index.