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Banking on Transparency

After the Federal Reserve’s policymaking meeting last March, the U.S. central bank surprised financial markets by revealing how officials had voted. The move was hailed as another step toward increased Fed openness. But is the Federal Reserve more or less forthcoming than its peer institutions? In a recent study titled "How Transparent Are Central Banks?" ...

After the Federal Reserve’s policymaking meeting last March, the U.S. central bank surprised financial markets by revealing how officials had voted. The move was hailed as another step toward increased Fed openness. But is the Federal Reserve more or less forthcoming than its peer institutions? In a recent study titled "How Transparent Are Central Banks?" (London: Centre for Economic Policy Research, 2002), economists Sylvester C.W. Eijffinger and Petra M. Geraats rank nine central banks by their degree of transparency.

The central banks of New Zealand, England, Sweden, and Canada earned the top spots. The European Central Bank (ECB) and the Fed tied for fifth, followed by the Australian and Japanese central banks. The Swiss National Bank brought up the rear, perhaps unsurprisingly, given longtime Swiss traditions of banking secrecy. The authors note that similarly ranked institutions may in fact display striking differences: For instance, the ECB stresses disclosure of its overall objectives, while the Fed emphasizes transparency in its ongoing policymaking process.

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