bandid nijathaworn : are there limits to transparency? remarks by mr bandid nijathaworn, deputy governor of the bank of thailand, at the imf conference on central bank communications, mumbai, 23 january 2006. * * * first, let me thank the imf and the reserve bank of india for the invitation. it is a pleasure to be here in mumbai. and i should also congratulate the imf for putting up what seems to be another useful and successful seminar. my contribution today is to speak on limits to transparency. given the limitations of time, i want to begin by looking at the needs of central banks for limiting transparency, especially in the context of central banks ’ own operations. then, i want to speak on the challenge facing central banks in designing appropriate disclosure policy. and finally, i want to share with you my thought on how to approach transparency in the context of monetary policy. transparency has now become an important policy aspect of central banking. not only is transparency linked directly to the governance issue, but greater transparency also imparts important benefits to the effectiveness of central bank policies. in broad terms, three benefits from greater transparency are often cited. first, greater information provided by the central banks allows market participants to accurately evaluate the behavior and the performance of central banks. this is most important for public organizations like central banks. second, financial markets tend to work more efficiently with greater transparency. this is because uncertainty is reduced as market expectations are formed using a more superior set of information. and third, being more transparent also helps raise the quality of central banks ’ own works which directly contributes to enhancing their credibility. however, despite the positive benefits, there are occasions when there would be arguments for central banks to go less than full transparency, especially with regards to their market operations. this is because transparency is not only about providing information as the academia normally assume. but transparency is also about how a central bank is being seen or being known in its operations in financial markets. hence, for its operations to be effective, sometimes less - than - full transparency can be more efficient, for example, in the foreign exchange markets. therefore, from practical considerations, the rationale for limiting central bank transparency includes : first, legal requirements and the risk of impinging on personal privacy, as well as for reasons of market or commercial sensitivity and public interest ; second, the risk of compromising the decision - making process ; for example, saying too much or giving out too

future u. s. policy following the recent political developments. secondly, other measures are being implemented to improve the business environment, including investments in infrastructure such as the standard gauge railway, advancing the use of information technology in doing business, and ensuring security, among others. these initiatives are key to promoting competitiveness in the economy. in addition, the growing youthful and entrepreneurial population is a boon to the business environment. kenya is ranked the world ’ s third most reformed country in the world bank 2017 doing business report. the performance of the economy has remained strong, with growth expected at 6. 0 percent in 2016 from 5. 6 percent in 2015. on the contrary, growth in the major african economies has been weighed down in 2016 largely due to the slump in commodity prices. thirdly, the diversification of the kenyan economy in terms of export products and external markets is a major source of resilience against adverse external shocks. about 40 percent of kenya ’ s exports are to africa, while the economy is not reliant on commodities. the current account deficit has been narrowing, and is projected at 5. 5 percent of gdp in 2016 from 6. 8 percent in 2015 and 9. 8 percent in 2014. the improvement in the current account balance reflects improved earnings from exports of tea, coffee, and horticulture. diaspora remittances and receipts from tourism have also been resilient. the cbk foreign exchange reserves, which stand at 4. 8 months of import cover, together with the precautionary arrangements with the imf totalling usd1. 5 billion continue to provide buffers against short term shocks. fourthly, as you may be aware, the banking sector has continued to play a key role in the economy through mobilisation of savings and allocation of the resources to key sectors. the cbk is strengthening the banking sector to ensure greater transparency and stronger governance, and also to promote effective business models and innovation. the central bank continues to engage with financial service providers to introduce innovative solutions or products in the market in order to boost financial inclusion and lower the cost of financial services. the cbk is also closely monitoring the impact of the recent legislation to cap bank interest rates on the economy, while implementing additional measures to lower the cost of credit on a sustainable basis. let me now turn to some of the available investment opportunities, which in my view provide the diaspora with an opportunity to participate in the development of our economy. i am happy that these products leverage