Economic transparency

Economic transparency refers to banks and other financial institutions making data available about their financial position and condition. However, the definition depends on the perspective of different research areas through which it is examined, mainly monetary economics, international finance, corporate finance, and others (e.g. public economics, international trade, asset pricing, and labor economics). This can be related to mandatory public reporting by commercial organizations or voluntary disclosure by government institutions such as central banks.

The WTO defines economic transparency as a “degree to which trade policies and practices, and the process by which they are established, are open and predictable.” (WTO’s 2014 glossary). United Nations Conference on Trade and Development (UNCTAD, 2012) relates to transparency as to “a state of affairs in which the participants in the investment process are able to obtain sufficient information from each other in order to make informed decisions and meet obligations and commitments”. According to the National Bureau of Economic Research (NBER) there are three main branches: transparency in economic policy, in the institutional structures surrounding the markets, and in the corporate sector.

Fiscal transparency is perceived to be essential for informed decision making, for guaranteeing some accountability, and for maintaining fiscal discipline. Central banks differ considerably in the ways in which they have become more transparent.