Leaders attending the G-20 summit on financial markets and the global economy on Saturday agreed to an action plan of immediate and medium-term measures to cope with the financial and economic woes now gripping the world.
The tasks include strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, reinforcing international cooperation, and reforming international financial institutions.
The leaders task their finance ministers with ensuring that the measures are "fully and vigorously implemented."
"They are responsible for the development and implementation of these recommendations drawing on the ongoing work of relevant bodies, including the IMF (International Monetary Fund), an expanded Financial Stability Forum (FSF), and standard setting bodies," the action plan said.
Immediate actions, which are to be taken before March 31, 2009, include addressing weaknesses in accounting and disclosure standards, developing recommendations to mitigate pro-cyclicality, enhancing the standards of credit rating agencies, and enhancing guidance to strengthen banks' risk management practices.
They also include enhancing regulatory cooperation between jurisdictions internationally and regionally, establishing "supervisory colleges for all major cross-border financial institutions, steps necessary to strengthen cross-border crisis management arrangements, and the expansion of the FSF "to a broader membership of emerging economies."
Medium-term measures include working toward the objective of creating a "single high-quality global standard" for accounting, collaboration to ensure "consistent application and enforcement of high-quality accounting standards," enhanced risk disclosures by financial institutions, commitment to undertaking a "Financial Sector Assessment Program" report and supporting the transparent assessments of countries' national regulatory systems, and requiring that credit rating agencies that provide public ratings be registered.
Other medium-term measures prescribed include development of robust and internationally consistent approaches for liquidity supervision of and central bank liquidity operations for cross- border banks, awareness and ability to "respond rapidly to evolution and innovation in financial markets and products," monitoring of "substantial changes" in asset prices and their implications for the macroeconomy and the financial system, implementation of national and international measures that protect the global financial system "from uncooperative and non- transparent jurisdictions" that pose risks of illicit financial activity.
The action plan also calls for other medium-term measures like ensuring that temporary measures to restore stability and confidence have minimal distortions and are unwound in a timely, well-sequenced and coordinated manner, greater voice and representation for emerging and developing economies in the Bretton Woods institutions, and strengthening of the IMF's role in providing macro-financial policy advice.
(Xinhua News Agency November 16, 2008)