Transparency around financial stability is achieved both by the central bank’s own reporting and perhaps more importantly by the disclosure requirements it imposes on financial market participants, enabling investors and depositors to assess lending risks.
A number of authors have argued that the Asian banking crisis of the late 1990s was exacerbated “by the lack of transparency and disclosure in the banking system, making it difficult to gauge the severity of the situation or propose timely solutions” (Rosengren, 1998, p2).