The Paper Presents a Theory of Optimal Transparency In the Financialsystem When Financial Institutions Have Short-Term Liabilities and Are Exposedto Rollover Risk. Our Analysis Indicates That Transparency Enhances Thestability of the Financial System During Crises But May Have a Destabilizingeffect During Normal Economic Times. Thus, the Optimal Level of Transparency Iscontingent on the State of the Economy, With the Regulator Increasingdisclosure In Times of Crises.