Why the central bank of a country should be transparent?

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Transparency is one of the most fundamental concepts in financial and vital activities in the world market from various perspectives. The reliability of financial information is critical for economic jetwn, investors, publikunt. It is impossible to know how a company is worth and whether to fund an in, if you can not rely on its financial data.
The need for transparency not only arises from the demand for accountability to an independent bank. She, by improving credibility, increases the effectiveness of monetary policy (Issing, 2001).
A. The importance of central bank transparency
Economists widely supporting the view that central bank transparency is important for two reasons:
1. increase their accountability regarding independence
2. increase the effectiveness of monetary policy.
• Transparency is an element of accountability that helps increase as the level of independence in the design of monetary policy is high. Given the tendency of politicians to use monetary policy to their short-term interests, monetary policy is entrusted to an independent central bank.
• Transparency ensures broad public support for the achievement of the main objective. In this way it affects the behavior of the public regarding wages and prices, facilitating the achievement of the ultimate objective of monetary policy.
• Transparency reduces asymmetries of information on the state of the economy and prospects of monetary policy decisions between the banking system and the private sector, thus helping to increase predictability. Most central banks control short-term interest rates, but, as the facts show theoretical and empirical, are long-term interest rates that matter most to the economy.
Monetary and fiscal policy should aim sustainability of these indicators, in addition to supporting economic growth.
1. Impact factors of supply and demand on the exchange rate of national currency is expected to be balanced. Inflationary pressures are expected to be moderate during the year, although prices of imported goods is an apparent risk.
2. The Bank of Albania will maintain its flexibility of monetary policy, to
before any possible development in inflation.

How transparent are central banks?

This section complements this view with a description of each central bank transparency during 1998-2002.
Reserve Bank of Australia
Although the Reserve Bank of Australia has approved the planning of inflation, it takes one of the lowest scores. Although the maximum loads the RBA takes political transparency, in terms of transparencesekonomike it does not publish quarterly data on capacity utilization approximate dhevetëm provides forecasts for inflation short term (quarterly) and manufacturing (six months) without details numerical term. OperacionalRBA about transparency does not provide nor a discussion of past forecast errors, the result of politikës.Banka asvlerësimi Australian Reserve shows that inflation targeting in no way guarantees transparency in all aspects.
Bank of Canada
Bank of Canada, another inflation targeter, gets higher in transparency.
It gains full score for political transparency, but lacks economic transparency, because it only publishes forecasts related to inflation and without full details of numbers for the medium term, there ulëtsepse procedural transparency does not disclose the number of minutes and voting records. It does best in transparency policy, although there is no clear indication of possible policy actions to come. BK missing for operational transparency gives full point not to discuss past forecast errors, not explicitly

European Central Bank
Start of transparency with a relatively low score of 8.5, the European Central Bank has significantly increased its transparency and now belongs to a score of 10.5. Although there is an inflation targeter, it reaches the maximum score for political transparency. For economic ECB transparency earns high marks, but this is entirely due to the recent developments, namely by publishing model of the euro area (in January 2001) projections six months of that medium term conditional on inflation and output (in December 2000 ). ECB’s procedural transparency is limited because it does not provide comprehensive and data minutes per votimin.Transparenca policy of the European Central Bank has raised a particle reporting and provides an explanation of the policy decision at a press conference after each meeting policy monetary, but still lacks a clear policy trend. On operational transparency, there is no discussion of past forecast errors on no account explicit and contributions of informal monetary policy.
Bank of Japan
The Bank of Japan has one of the results of lower transparency (8) in our sample. Political is limited because it has multiple objectives of monetary policy without detail.
Reserve Bank of New Zealand
Reserve Bank of New Zealand, which has been one of the most transparent central banks
our sample all began with a score of 10.5 in 1998 and then rose to 14 points. RBNZ is inflacioni.Rezultati transparency targeter political, economic, procedural and policy. RBNZ realized an impressive increase transparency in policy and operational in March 1999, when she changed her But RBNZ still shortcomings on transparency operative marks because it does not provide a discussion of the past.

 

WHY IT IS IMPORTANT BANK TRANSPARENCY? CONCLUSIONS

 

Effect of Central Banks transparency already affecting us:
• Supervision of financial markets and financial assistance policies to prevent financial crises, transparency allows a broader collaboration with the executive government and central publikut.Bankat to make monetary policy decisions credible, based on what is good for economy long term, despite short-term political considerations. Central bankers should be fully accountable to the public for their decisions, but information and experiences strongly support the proposal to isolate monetary policy from short-term political pressures and helps desirable macroeconomic results and financial stability.
• the volatility of output and inflation showing a negative correlation between transparency Banks targeting inlfacionit Qendrore.Nje error reacts directly in production expectations from the business, investment policies, the public response to the demand, stability and reliability with investment higher for positive results.
• Transparency and decision of the Central Bank, the focus of policy in the long term, focusing on objectives in the long term will make sure and cooperate for an economic stability, employment stable and its growth above the required short-term with the resultant apparently but poorer in the long term by governments.
• With regard to policy on emissions and increasing the money supply, pressures for non transparency to policy lending, monetization and debt relief to their policy of a transparency makes it difficult role of influencers and efficient work of the Central Bank.
• Transparency serves as the best approach for a balanced position of the Bank as the regulator responsible monetary balance, liquidity, infacionit, economic development, welfare, as a bridge between the public, business, individuals, government and international factors.

Mike Adams

Mike Adams

Ceo/Founder of Arise Zone at Arise Zone
Hi! I'm Mike Adams, a guy from Kentucky, in love with online business. I'm the one behind of this blog. The reason why I created this is to share helpful stuff not only for money or economy in general, but for making money online.This site is THE BEST to generate money online and create online business. I can help you with any question you have commenting here or at official email:
arisezone@gmail.com Love you Mike 🙂
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Hi! I'm Mike Adams, a guy from Kentucky, in love with online business. I'm the one behind of this blog. The reason why I created this is to share helpful stuff not only for money or economy in general, but for making money online. This site is THE BEST to generate money online and create online business. I can help you with any question you have commenting here or at official email: arisezone@gmail.com Love you Mike :)