A commitment mechanism is a means for removing the risk of opportunistic policy in particular contingencies. Commitment mechanisms are closely related to more general factors that enhance policy credibility. Integration into the world economy can strengthen commitment to policies that foster private investment. A government can enter into agreements with other governments or international institutions to make deviations from prudent trade and macroeconomic policy more difficult for itself. The GATT, the European Union, and the CFA Franc Zone are examples of such international arrangements.
Domestic institutions can also foster policy commitment.
For example, an independent Central Bank can help to insulate monetary policy from short-term budget pressures. A valued reputation for pursuing particular types of policies can also serve as an assurance that such policy will be pursued consistently despite adverse short-term incentives.