World leaders issue declaration on financial markets and the world economy
WASHINGTON, DC - Following the summit held in Washington, DC over the weekend, the leaders of the G-20 countries have issued a declaration that focuses on the root causes of the financial crisis, actions already taken and to be taken, and common principles for reform of the financial markets, including an action plan to implement them.
The principles endorse a move for increased global regulation of financial services. Each of the G-20 countries have committed to the following common principles for reform:
· Strengthening transparency and accountability: We will strengthen financial market transparency, including by enhancing required disclosure on complex financial products, and ensuring complete and accurate disclosure by firms of their financial conditions. Incentives should be aligned to avoid excessive risk-taking.
· Enhancing sound regulation: We pledge to strengthen our regulatory regimes, prudential oversight and risk management, and ensure that all financial markets, products and participants are regulated or subject to oversight, as appropriate to their circumstances. We will exercise strong oversight over credit rating agencies, consistent with the agreed and strengthened international code of conduct. We will also make regulatory regimes more effective over the economic cycle, while ensuring that regulation is efficient, does not stifle innovation, and encourages expanded trade in financial products and services. We commit to transparent assessments of our national regulatory systems.
· Promoting integrity in financial markets: We commit to protect the integrity of the world's financial markets by bolstering investor and consumer protection, avoiding conflicts of interest, preventing illegal market manipulation, fraudulent activities and abuse, and protecting against illicit finance risks arising from non-co-operative jurisdictions. We will also promote information sharing, including with respect to jurisdictions that have yet to commit to international standards with respect to bank secrecy and transparency.
· Reinforcing international co-operation: We call upon our national and regional regulators to formulate their regulations and other measures in a consistent manner. Regulators should enhance their co-ordination and co-operation across all segments of financial markets, including with respect to cross-border capital flows. Regulators and other relevant authorities as a matter of priority should strengthen co-operation on crisis prevention, management and resolution.
• Reforming international financial institutions: We are committed to advancing the reform of the Bretton Woods Institutions so that they can more adequately reflect changing economic weights in the world economy in order to increase their legitimacy and effectiveness. In this respect, emerging and developing economies, including the poorest countries, should have greater voice and representation. The Financial Stability Forum (FSF) must expand urgently to a broader membership of emerging economies, and other major standard-setting bodies should promptly review their membership. The IMF, in collaboration with the expanded FSF and other bodies, should work to better identify vulnerabilities, anticipate potential stresses, and act swiftly to play a key role in crisis response.
Click here for a copy of the declaration http://www.whitehouse.gov/news/releases/2008/11/print/20081115-1.html
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