Transparency refers to a process by which information about existing conditions, decisions and actions is made accessible, visible and understandable. Accountability refers to the discipline and need to justify and accept responsibility for decisions taken. Generally, transparency and accountability work hand in hand to help improve economic performance. The Asian financial crisis has demonstrated that we have gaps in disclosure, gaps in incentives to use information, gaps in the law and regulatory net and gaps in capacity to use information. But we must remember transparency is not an end in itself.
Transparency entails a price.
Transparency and disclosure have costs because it costs to produce high quality information. There will always be a trade-off between the high cost of collecting information, analyzing information, and using information and the need to disclose the information for the public good. My personal lesson from the Asian crisis is that a macro-crisis has micro origins. I have also learnt that full transparency of bad accounts is still bad disclosure. Consequently, the Financial Stability Forum decided last September that a Task Force should be established to look at the Implementation of Standards relevant for sound financial systems.