On 2 July 2020, the Executive Board of the International Monetary Fund (IMF) approved the new IMF Central Bank Transparency Code (CBT)—the Code itself was released on 30 July. Developed in wide consultation with relevant stakeholders and in light of considerably evolving central bank roles especially in response to the 2008 Global Financial Crisis, reinforced by COVID-19, the five pillars of the CBT include transparency in: (i) governance; (ii) policies; (iii) operations; (iv) outcomes; and (v) official relations.
Essentially, the premise of the CBT is that:
“more transparency and accountability are required to maintain public support, safeguard independence, and enhance policy effectiveness”.
The Code is intended to “facilitate more effective communication between the central bank and its various stakeholders, reducing uncertainty and anchoring public expectations”. In short, the idea seems to be to make the objectives, functions and modus operandi of central banks more “visible” to the public. Transparency and visibility would make central banks more effective and trusted. Several CBT reviews on voluntary basis will be carried out over the next two years, in collaboration with the relevant authorities. This article reflects on the sincere efforts of the central banks of the Pacific Island Countries (PICs) in making themselves more visible to the public.
PICs by nature are remote, open, vulnerable, socio-economically challenged, trade-, aid- and tourism-dependent small island nations. At the region’s central banks, local capacities are limited for example in conducting independent, rigour and evidence-based, policy-related research, and in disseminating commentary, analysis, insights and thought leadership on financial and economic issues. Nevertheless, it is the courage and commitment to overcome these limitations that have inspired the Governors of the PIC central banks to collaborate with Griffith University to develop such capacities and, as demonstrated later, the Governors are leading by example.
Research to policy (R2P)
Via bi-lateral (soon to become regional/multilateral) MoUs, the central banks of Papua New Guinea, Fiji, Solomon Islands, Vanuatu and Timor-Leste have, over the past few years, been collaborating with Griffith University to build capacity for their staff in conducting independent research that would eventually become a sound basis for policy-making. Subsequently, there will be no more “eye-balling”, as the Governor of Reserve Bank of Vanuatu observes. Several evidence-based joint working papers have now been published and are accessible to the public at large via the central bank websites and South Pacific Centre for Central Banking (SPCCB); these papers, a first for PIC central banks, are also being published in international refereed journals. Until such time that these research papers do become an integral component of real policy-making, the message to the public is that PIC central bankers are becoming more capable of conducting scientific research and thereby better appreciate the critical research to policy (R2P) connection.
Engagement with stakeholders and media
Endeavouring to make the research capacity development and thereby the findings of the working papers more widely visible, the PIC central banks have commenced an annual regional conference for the purpose. The joint Griffith-central banks annual regional event brings together South Pacific central bank researchers to share with academics, policy makers, regulators, multilateral organisations, business leaders, civil society, from the South Pacific, Australasia and the wider Asia-Pacific region current research on the region and to explore vital links between research and policy relating to central banking issues, including financial and private sectors and economic growth and development. Stakeholders include DFAT, MFAT, the World Bank, IMF, ADB, central banks of Australia and NZ and government departments; they participate as speakers, moderators, panellists, resource persons and observers. The local media outlets are also invited to the conferences.
Regional policy dialogue
The conference events include a policy dialogue session. The purpose of the high-level regional policy dialogue is to create an atmosphere that promotes spirited interaction among participants and helps policy makers fine-tune their own approaches as they apply the lessons and details of SPCCB-supported economic policy research on the region. In addition, the dialogue is designed to improve the prospects for cooperative policy research between policy makers and researchers. More developed working papers are presented to the Governors and senior stakeholders for discussion and debate on the next steps—including implications for policy reform and development.
The commitment to independent, rigor and evidence-based R2P is further demonstrated by the willingness of the central banks to partner with Griffith University for a cost-sharing program that enables up to four central bank candidates per year to enrol in PhD studies. The intention of the program is to produce an active, well-informed group of locally based, adequately trained and professional researchers to conduct policy-relevant research.
In addition to engaging widely with stakeholders, governments, media and others via the conference and otherwise for the purpose mainly of sharing and disseminating research findings, the central bankers have been sharing widely with the public, commentary, analysis, insights and thought leadership on financial and economic policy related issues, focusing primarily on the PICs. Disseminated via the Pacific Forum, the blogs provide the central bankers an avenue to develop capacities for a coalesced “academic rigour and journalistic flair” writing style, akin to The Conversation. The Forum also helps build confidence of the central bankers in engaging with the general public, alerting the public of new policies, strategies, information sharing across the region, etc. and enhances collegiality and interactions in the region. Stakeholders, media and others are kept updated on the new blogs.
Governors lead by example
The Governors are not only providing an environment and encouraging their staff to develop capacities and engage widely with the public and stakeholders, but are , leading by example. For example, they participate fully at the regional conferences and policy dialogues and avail themselves to open, unscripted public scrutiny; the 2018 Suva conference is a case in point where the issue was “Central banking in an increasingly uncertain and risky environment: How is the South Pacific responding?” If that was unprecedented, then more extraordinary will be the November 2020 Virtual Governors’ Forum where the issue will be “COVID-19 and the PICS: Opportunities and challenges for central banking”. Participants will include the stakeholders mentioned above, central bankers from the region, academics and media.
The Governors share their views and keep the public updated on their work via the Pacific Forum as well. The latest, by the Governor the Bank of Papua New Guinea, on “The impact of COVID-19 and policy measures undertaken in Papua New Guinea” is a great example of information sharing and lessons for other central banks. The Deputy Governor of the Central Bank of Solomon Islands had earlier shared his views on Information sharing among Pacific central banks: Some thoughts, resulting in a regional committee formed for the purpose. Similarly, the Governor of the Central Bank of Solomon Islands has shared his views on Capacity building and central banking in the Pacific.
Thus, the efforts of the PIC central banks, led by the Governors themselves, is exemplary of enhancing transparency. And what is more, they are eager to collaborate and learn from others, including stakeholders.
Dr Parmendra Sharma is a senior lecturer in the Department of Accounting, Finance and Economics and member of the Griffith Asia Institute.