Central Bank Transparency: A Market Indicator

It is widely believed that monetary policy outcomes are generally enhanced if the conduct of policy by the central bank is widely understood by other agents in the economy. This widespread belief has given rise to a number of attempts to measure the ‘transparency’ of monetary policy in various regimes. Unsurprisingly, the degree of transparency depends upon a variety of institutional arrangements peculiar to each monetary regime. Thus, the dominant approach to measurement relies upon identifying a range of legal and other formal characteristics - in a manner very reminiscent of the central bank independence literature of fifteen years ago. This approach is not entirely satisfactory, however, since it is agents’ perceptions of the degree of transparency that matters if transparency is to have any effect on policy outcomes. This has given rise to other methods of measurement which survey the views of agents. While this is potentially more relevant, it is obviously possible that their statements may differ from their actions. This paper takes a different approach which is to look at the extent to which money market interest rates anticipate central bank announcements of changes in policy rate in the case of the Bank of England (post-1997), the ECB and the (ex-) Bundesbank. In contrast with earlier studies which all claim to find significant (but not consistent) differences between the degree of transparency in each of these regimes, evidence from money market behaviour suggests that the degree of transparency is comparable across all three.Central Bank Transparency; Market;Indicator

CEOs Remuneration in Corporate Governance Codes in EU Member Countries

The purpose of the paper is to compare regulations in corporate governance codes in 27 EU countries concerning remuneration of top executives. It enables identifying two main mechanisms which are implemented in CG codes - market mechanism based on high level of remuneration transparency and hierarchical mechanism based on setting rules according to which corporate boards establish a formal procedure for fixing the remuneration packages of executives. The paper presents the discussion on determinants of these two mechanisms

Implications for liquidity from innovation and transparency in the European corporate bond market

This paper offers a new framework for the assessment of financial market liquidity and identifies two types: search liquidity and systemic liquidity. Search liquidity, i.e. liquidity in “normal” times, is driven by search costs required for a trader to find a willing buyer for an asset he/she is trying to sell or vice versa. Search liquidity is asset specific. Systemic liquidity, i.e. liquidity in “stressed” times, is driven by the homogeneity of investors - the degree to which one’s decision to sell is related to the decision to sell made by other market players at the same time. Systemic liquidity is specific to market participants’ behaviour. This framework proves fairly powerful in identifying the role of credit derivatives and transparency for liquidity of corporate bond markets. We have applied it to the illiquid segments of the European credit market and found that credit derivatives are likely to improve search liquidity as well as systemic liquidity. However, it is possible that in their popular use today, credit derivatives reinforce a concentration of positions that can worsen systemic liquidity. We also found that post-trade transparency has surprisingly little bearing on liquidity in that where it improves liquidity it is merely acting as a proxy for pre-trade transparency or transparency of holdings. We conclude that if liquidity is the objective, pre-trade transparency, as well as some delayed transparency on net exposures and concentrations, is likely to be more supportive of both search and systemic liquidity than post-trade transparency. JEL Classification: G14, G15, G18.Financial market functioning, liquidity, transparency, credit markets and financial innovation.

Principles for Accountable Leadership — The AA1000 Series

Author Daniel Waistell, Standards Manager of London-based AccountAbility, has provided the most recent benchmarks of identifying stakeholders for businesses to pursue greater sustainability in their respective operations. These standards are often coupled with world protocol reporting guidelines, including Global Reporting Initiative headquartered in Amsterdam (a United Nations-based program voluntarily used by the majority of Fortune 1000 companies as well as myriad small and medium enterprises). Waistell demonstrates the need for more transparency in business operations and reporting activities to achieve greater accountability for a wider array of non-traditional stakeholders

Towards Transparency in Finance and Governance

The study of transparency is increasingly a more topical, broadly relevant, but also more under-researched enterprise. The Asian financial crisis has highlighted not only the welfare consequences of financial sector transparency, sparking a series of yet unresolved debates, but has also linked this relatively narrow problem to the broader context of transparency in governance. Its significance has broadened geographically as well as across different sectors. It has been observed that curtailment of transparency, often on scanty pretexts, is commonplace even in the highly developed countries. This suggests a broad and possibly radical reform agenda. Departing from the urgency of these observations, this paper reviews the existing literature on transparency in finance and governance, indicates remaining knowledge gaps, and offers some hypothesis on the mutual significance of the two issues. The first two sections of the paper outlines a conceptual framework for defining and measuring transparency that distinguishes among its desirable characteristics; access, timeliness, relevance, and quality. It also suggests methodologies that may produce tractable measures of transparency. Additionally, it places in context debates concerning transparency; its desirability, contingency, complexity and regulation. Reviewing critiques of objections against disclosure, the chapter advances a general preference for transparency, not only in the developing but also in the developed world. Nevertheless, it emphasizes the need to weigh the costs and benefits of more transparency in designing regulatory policy. In general, while consequences of information imperfections are well recognized, the solution is not simply a matter of more information. The third section treats the role of transparency in promoting greater financial stability, acknowledging exceptions to the general preference expressed earlier, in relation to financial stability. It treats as priority policy issues the following problems: developing institutional infrastructure, developing standards and accounting practices, improving incentives for disclosure and balancing countervailing regulations to minimize perverse incentives generated by safety net arrangements such as deposit insurance. An important suggestion is that since institutional development is gradual, relatively simple regulations such as limits on credit expansion, may be best tailored to developing countries. Implicit in this section is the notion that there are absolute limits to transparency, in particular for lack of adequate enforcement. The last section elaborates on the concomitant link between financial markets and governance, discussing select consequences of transparency for national-level and local governance, identifying some policy implications and suggesting further research issues. As illustrated by the case of Indonesia, it argues that financial reform may be predicated on broader public sector reforms. Again, because formal institutions take time to develop, it highlights three principles of reform to promote incentives for openness: harnessing private sector participation in service provision, promoting exit and contestability, and encouraging "voice" and public participation. These are now increasingly being integrated to new innovative data collection and analysis techniques, and to particular dissemination methods promoting collective action to improve governance and enhance transparency. The chapter concludes by outlining the difficulties of implementing greater participation and voice.financial liberalization, transparency, corruption, governance, banking crisis, asymmetric information, local investors, shocks, bad loans, emerging markets

Strengthening governance of social safety nets in East Asia

Several East Asian countries, in the aftermath of the global financial crisis, are considering an expansion of their social safety net programs. In many cases, existing delivery mechanisms for social assistance in the region tend to be basic, in line with the small size of programs. In a context of coverage expansion and proliferation of new programs, the risk of creating increasingly complex systems characterized by cross-incentives is high. Lack of coordination, ambiguous criteria for identifying and selecting beneficiaries, low administrative capacity, lack of transparency and limited beneficiary participation pose risks for program effectiveness and can decrease accountability. Good governance can improve program outcomes through effective program coordination, stronger accountability arrangements, provider incentives and greater transparency and participation. This paper proposes an analytical framework to systematically identify governance risks and constraints which, if removed, could improve the outcomes of modern social assistance programs.Health Monitoring&Evaluation,Safety Nets and Transfers,National Governance,Governance Indicators,Poverty Monitoring&Analysis

Illegal Fishing, Your Number's Up!

Unlike merchant vessels, automobiles, and even cellphones, fishing vessels are not required to have unique identifying numbers that stay with them from construction to scrapping. Although fishing vessels have names, call signs for radio transmissions, and other identifiers, these are not permanent and can be changed by owners quickly and easily. The lack of mandatory, unique, and permanent identifying numbers makes it difficult for authorities to distinguish specific vessels engaged in illegal, unreported, and unregulated, or IUU, fishing, and to track misconduct and gather evidence when they suspect unlawful activity. As a result, vessel owners, even those who have been blacklisted for IUU fishing, can circumvent control measures and continue to fish without being traced. They can operate for years with no accurate record of their activities, operating condition, or compliance status. The solution: mandatory, unique, and permanent ship identification numbers in accordance with the standards of the International Maritime Organization, or IMO. The IMO number is used throughout the maritime industry as the first point of reference in identifying a ship; the number remains unchanged even if the ship is re-flagged to another country or sold. IMO numbers would increase the transparency of fishing vessel operations and help authorities identify fishing vessels and owners who try to conceal illicit activit

Trade Facilitation Provision in Regional Trade Agreements in Asia and the Pacific

This paper provides a short overview on the trade facilitation provisions in the RTAs in the Asia-Pacific region with a view to identifying the characteristics of trade facilitation provisions in existing RTAs and finding out good practices in this area. With the evolution of the definition of trade facilitation, a broader range of trade facilitation provisions are integrated into RTAs, which cover nine major areas. 1. Customs procedures and cooperation; 2. technical regulations, standards and SPS measures; 3. NTB especially administrative fees and charges; 4. transparency of laws, regulations and administrative rulings; 5. use of information and communication technology and E-Commerce; 6. mobility of business people; 7. freedom of transit; 8. facilitation in transport and logistics; 9. facilitation in payment and trade finance. The data about RTAs mainly come from the Asia-Pacific Trade and Investment Agreements Database (APTIAD).trade facilitation, RTAs, NTB, SPS measures, customs procedures and cooperation, technical regulations, standards, transport and logistics, trade finance, e-commerce, transparency.

Bibliometric and Trend Analysis of Budget Transparency

Over the last few decades, an integral part of public finance development is budget (fiscal) transparency and accountability. It is also in the focus of scientific interest and international organizations’ activity. Nevertheless, there is still a lack of valuable empirical research on identifying key triggers and inhibitors of budget (fiscal) transparency and its cohesion with other concepts in public finance management