The Bank of Canada today welcomed the publication by the International Monetary Fund (IMF) of its final report summarizing its pilot review of the Bank’s transparency practices. The report contained several recommendations for how the Bank could further enhance its transparency, and the Bank published its formal response to those recommendations today.
This past spring, using the IMF’s new Central Bank Transparency Code (CBTC), an IMF Mission Team made up of independent experts reviewed the Bank’s transparency practices across five areas: governance, policies, operations, outcomes and official relations. The Mission Team met with staff and management from across the Bank as well as with a broad range of stakeholders, including academics, think tanks, parliamentarians, market participants and journalists.
“I would like to sincerely thank the IMF for undertaking this transparency review and members of the Mission Team for their thorough work. I am also grateful to our many stakeholders for being generous with their time and candid in their feedback,” said Bank of Canada Governor Tiff Macklem. “We were pleased to participate in this pilot process, and we will benefit from the recommendations in this report. We support the IMF’s Central Bank Transparency Code and hope other central banks will be encouraged to use these tools.”
Through the course of its review, the Mission Team recognized that the Bank of Canada sets a high benchmark for transparency and is broadly aligned with expanded and comprehensive practices, as defined by the CBTC. As well, the IMF reported that stakeholders consider the Bank to be an open, dynamic and transparent public institution.
In particular, the IMF report characterizes the Bank’s monetary policy framework as comprehensive, transparent and understandable. It notes that the Bank has long been setting the standard for monetary policy communication. It adds that the Bank regularly publishes clear and understandable information on its policy framework, decisions and operations. The Bank’s use of novel communication tools and channels as well as its active approach to listening to stakeholders were also acknowledged as strengths.
In its response, the Bank announced that it will publish a summary of deliberations after each policy rate announcement, beginning in January 2023. More details about this new publication will be shared in the months ahead.
The Bank also agreed to enhance transparency around its risk management and audit functions. And it will strengthen its efforts to communicate broadly, and in plain language, about financial stability issues.
“We know that by being transparent, we can help all Canadians understand what we are doing and why, and that’s essential for their trust” Macklem said. “This is always important, and especially crucial as we work to bring inflation back to the 2% target.”