What is the Report on the Observance of Standards and Codes?

The Report on the Observance of Standards and Codes is a report compiled by the World Bank and International Monetary Fund summarizing countries adherence to the internationally recognized standards and codes in 12 policy areas. The Standards and Codes are considered to be the indicator of good practices.

How is the Report on the Observance of Standards and Codes Used?

The Report on the Observance of Standards and Codes initiative was introduced in 1999 for strengthening the international financial architecture. It promotes greater financial stability through the development, dissemination, adoption, and implementation of international standards and codes. 

The 12 policy areas examined in this report fall under three broad categories policy transparency, financial sector regulation and supervision and market infrastructure. Data dissemination, fiscal policy transparency, and monetary and financial policy transparency fall under the category of policy transparency. 

Financial sector regulation and supervision include banking supervision, securities regulation, and insurance supervision. 

The third category includes crisis resolution and deposit insurance, insolvency and creditor rights, corporate governance, accounting and auditing, financial market infrastructures and market integrity. 

The World Bank monitors accounting and auditing; corporate governance and insolvency and creditor rights. 

IMF has developed the standards in the policy transparency. 

The financial sector regulation and supervision standards have been developed by specialized standard-setting bodies.

 The institutional and market infrastructure standards are developed by specialized standard-setting bodies with substantial inputs from the World Bank and the IMF. 

In November 2002, anti-money laundering and countering the financing of terrorism was added in the observance list. The reports are prepared and published at the request of the member countries. It helps to sharpen the policy discussion of the IMF and World Bank with the national authorities. The report is also used for risk assessment in the private sector including rating agencies. 

The World Bank and IMF publish regular short updates on this and the full-fledged reports are produced in every few years.