Transparency and central bank losses in developing countries

Osama D. Sweidan, Benjamin Widner

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)


Recent evidence shows central banks suffering from losses in some developing countries. This is a surprise to economists and policymakers. At the same time, these banks are asked to conduct monetary policy within a more transparent framework. Therefore, this paper seeks to answer the following question: Would more transparency in developing countries suffering from central bank losses be beneficial? This paper shows that the cost constraints of conducting monetary policy, central bank losses, in both transparency and opacity alike is significant and affects positively the error of the private sector in expected inflation rate and the output gap. In a country suffering from central bank losses, the expected benefits of transparency and the existence of cost constraint move in two opposite directions. As a result, it is unwise for developing countries suffering from central bank losses to focus on transparency. Priority should be given to fixing monetary policy and to developing financial markets.

Original languageEnglish
Pages (from-to)45-54
Number of pages10
JournalResearch in Economics
Issue number1
Publication statusPublished - Mar 2008
Externally publishedYes


  • Central bank losses
  • Monetary policy
  • Transparency

ASJC Scopus subject areas

  • Economics and Econometrics


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