شفافیت و زیان های بانک مرکزی در کشورهای در حال توسعه

Recent evidence shows central banks suffering from losses in some developing countries. This is a surprise to economists and policymakers. At the same time, these banks are asked to conduct monetary policy within a more transparent framework. Therefore, this paper seeks to answer the following question: Would more transparency in developing countries suffering from central bank losses be beneficial? This paper shows that the cost constraints of conducting monetary policy, central bank losses, in both transparency and opacity alike is significant and affects positively the error of the private sector in expected inflation rate and the output gap. In a country suffering from central bank losses, the expected benefits of transparency and the existence of cost constraint move in two opposite directions. As a result, it is unwise for developing countries suffering from central bank losses to focus on transparency. Priority should be given to fixing monetary policy and to developing financial markets.

Central banking has experienced considerable change during the last decade. The recent paradigm in monetary policy is to have independent and transparent central banks. The argument among economists about transparency is a continuation to the debate that tries to answer the following question: Should monetary policy be made by rule or discretion? This dispute is related more to the institutional characteristics of the central banks and their effect on the monetary policy performance. Recent studies in this area have attempted to focus more on the optimal degree of transparency. The proponents of transparency agree that it is a self-evident necessity in order to attain sound monetary policy. As well, it affords better control of the public’s expectations by the central bank. Besides, it helps the actions adopted by the central banks to be more accountable. The technical effect of transparency to achieve price stability at lowest cost comes from the following process: the central bank should preannounce a low inflation target and commit to achieving it. In addition, the central bank should make the target reasonable for the public to let the announcement influence their expectations. Some economists went further to describe transparency as a part of democratic society. They assure that transparency should be a feature of the economy to guarantee successful economic policy. Stiglitz (1998) describes transparency as a central aspect of the democratic process, and a necessary condition for democratic governance to survive. Furthermore, he believes that the existence of transparency and democratic society reduces the concentration of power in the hands of single individuals, and is able to control human fallibility. Likewise, Mishkin (1999) demonstrates that transparency not only increases the ability of the central banks to conduct an effective monetary policy, but also helps to align central banks with democratic principles. Moreover, it promotes public support for the goals of monetary policy and reduces political pressures on the central banks. On the other hand, in a vital work Cukierman (2005) does not agree with full transparency in all cases. He assures that full transparency is not necessarily an optimal solution. Consequently, he distinguishes between areas in which high transparency is desired and areas in which an intermediate level of transparency is desired. He corroborates that it is highly risky and counterproductive to publish signals about severe problems in the financial system. This behaviour might lead to an unanticipated reaction from the public. Within the context of this debate, the central banks of developing countries are asked to present increased transparency. However, most of the theoretical analysis of transparency never pays no attention to the features of developing counties. Recent observations from developing countries submitted by economists such as Dalton and Dziobek (2005), Chandavarkar (1996) and Leone (1993) show that many central banks are suffering losses. It reads like a novel having losses in the income statement of a central bank. Thus, the current paper tries to address a specific question which is: would more transparency in developing countries be beneficial within this restriction? To answer this question, we use a known model from monetary economics. This model is used by Tarkka and Mayes (1999), and we upgrade part of it to shed light on the uniqueness of developing countries. Our results show that the cost constraints of conducting monetary policy, the central bank’s losses, in both transparency and opacity alike are significant and affect positively the error of the private sector’s expected inflation rate, and the output gap. In a country suffering from central bank losses, the benefits of transparency and the effect of cost constraint move in opposite directions. As a result, it is unwise for developing countries suffering from central bank losses to focus on transparency. Priority should be given to fixing monetary policy and to developing financial markets. The result of the current study raises an important implication and even a solution to why developing countries do not switch to using required reserve ratio as a monetary tool to guarantee a minimum cost of short-run operations of monetary policy. Despite the fact that this tool has criticisms2 it is still a good choice to help monetary authorities in these developing countries to catch a balance in their income statements. The rest of the paper is organized as follows: Section 2 presents the literature review about both transparency of monetary policy and central bank losses. Also, it describes the problem facing developing countries and its effect on conducting monetary policy. Section 3 introduces the model of the paper. Sections 4, 5 and 6 bring in the calculations of both inflation error and output gap under transparency and opacity. Conclusions are drawn in the last section.

We believe that developing countries are not subject to all theories applied to developed countries. The privacy of the problems in developing countries plays a crucial role in this mismatch. The current paper focuses on the transparency of central banks in developing countries. This issue looks important because recent evidence shows that the central banks in some developing countries suffer from losses. We think this issue is unique, important and never expected to happen. We try to answer the following question: Would more transparency in developing countries suffering from central bank losses be beneficial? To achieve our goal, we utilize a model used by other economists to study transparency. However, we upgrade part of the model to shed light on the uniqueness of developing countries. This paper illustrates that the cost of adopting a contractionary monetary policy has a positive relationship with the central bank’s inflation target and actual inflation rate. In addition, in the long run, monetary policy will be less sensitive to any shock in the economy. These results create a gap between the actual macroeconomic variables i.e. inflation rate and output and its expected value by the private sector. If the private sector believes it is living within a transparent economic system, many questions arise concerning the accountability of monetary forecasts. Therefore, we believe that the existence of both transparency and cost constraint on the conduct of monetary policy will not stay forever. The constraint works to terminate transparency. The outcome of the current paper proves that the effect on inflation error and output gap moves in two opposite directions. Therefore, transparency in developing countries with central bank losses could be beneficial for a very short period of time, and in the long run we expect that transparency vanishes. It is a necessary condition to have a suitable environment for transparency, and it is unwise for developing countries suffering from central bank losses to focus on transparency; priority should be given to fixing monetary policy and to develop the financial markets. We would like to confirm that repairing monetary policy in developing countries should track two dimensions: first, central banks suffering operational losses because of adopting open market operations should switch to monetary policy that lowers the cost as required by the reserve ratio. Second, we reconfirm the procedures proposed by the IMF which enforce governments to recapitalize central banks facing losses, and commit governments to adopt this action in advance.