Monetory

Report of The Advisory Group on Transparency in Monetary and Financial Policies September 2000 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Annex. 1 Annex. 2 Introduction Overall concept Critical Evaluation of India’s Compliance with International Codes Process of Monetary Policy Formulation Transparency in Policy Formulation Summary of Recommendations Reserve Bank of India Memorandum on Constitution of Advisory Group on Transparency of Monetary and Financial Policy Institutional Aspects of Monetary Policy Formation in Select Countries

CHAPTER 1 INTRODUCTION 1.1 Developments in the international financial system and discussions on the international financial architecture have focused attention on the need to evolve sound standards. There is now increasing international convergence that transparency of monetary and financial policies is an important element in the evolution of such standards. Transparency is now regarded not only as an aspect of good governance and promoting credibility, integrity and, in the ultimate analysis, accountability for policies, but as a positive contribution to putting the operations of financial institutions on a sound footing. Indeed, the perceived lack of transparency has been suggested as a proximate cause of the South East Asian currency crisis of a few years ago. In this context the IMF evolved a Code of Good Practices on Transparency in Monetary and Financial Policies which was adopted by the Interim Committee (September 1999) and recommended its adoption by various countries. In order to deal with various aspects of relevance to India, the Reserve Bank of India (RBI) set up, in December 1999, a Standing Committee on International Financial Standards and Codes. A number of Advisory Groups were also constituted to go into specific aspects. The present Advisory Group on Transparency in Monetary and Financial Policies was set up with Shri M. Narasimham as Chairman and Shri S.S. Tarapore as member, with the following...