Tietmeyer Proposal: Financial Stability Forum Convened to Promote Cooperation in Supervision of Global Markets

• Pages: 69-71

Page 69

In considering ways of strengthening the international financial system, the finance ministers and central bank governors of the Group of Seven countries asked me at their meeting on October 3,1998, "to consult with other appropriate bodies and to consider with them the arrangements for cooperation and coordination between the various international financial regulatory and supervisory bodies and the international financial institutions interested in such matters, and to put to us expeditiously recommendations for any new structures and arrangements that may be required." This mandate was restated and extended in the declaration by the Group of Seven finance ministers and central bank governors on October 30, 1998 [see IMF Survey, November 16,1998, page 360].

In order to fulfill this mandate, I have held thorough consultations with representatives of all the Group of Seven countries, the international financial institutions, and various international bodies. These consultations were helpful in identifying key areas in the international financial system where improvements are essential in order to safeguard the proper functioning of the markets. A broad consensus emerged during this consultation process and is reflected in this report.

Current Arrangements for Supervision and Surveillance

Various international organizations share responsibility for the current arrangements concerning the supervision and surveillance of the international financial system. The international financial institutions contribute in various ways to strengthening the global financial system:

- The IMF has responsibility under its Articles for surveillance of all member countries and monitors developments in the global economy and financial markets.

- The World Bank under its mandate uses its expertise to assist countries in the design and implementationPage 70 of reforms to strengthen financial systems, including banking, capital markets, and market infrastructure. In addition,

- The Bank for International Settlements (BIS) provides analytical, statistical, and secretariat support for various official groupings working to strengthen the global financial system.

- The Organization for Economic Cooperation and Development (OECD) participates in the process of macroeconomic and financial surveillance and formulates guidelines for evaluating and improving the framework for corporate governance.

The cooperation and coordination of supervisory practices are affected by various sector-specific international groupings of regulators and supervisors, in particular:

- The...