Sunday, 15 March 2009

G20 Communique - low expectations were met

Here are they key parts of the communique issued following the meeting of the G20 Finance Ministers in Sussex, England which relate to Strengthening the Financial System . Spinmeisters were doing their best ahead of this meeting to ensure that expectations were kept low and what emerges from the communique and the background news pieces shows that those low expectations have been fully met.

  1. To further strengthen the global financial system we have completed the immediate steps in the Washington Action Plan and we welcome the Financial Stability Forum’s (FSF) expansion to all G20 members. We remain focused on the medium term actions, and make recommendations to the London Summit to ensure:
    • all systemically important financial institutions, markets and instruments are subject to an appropriate degree of regulation and oversight, and that hedge funds or their managers are registered and disclose appropriate information to assess the risks they pose;
    • stronger regulation is reinforced by strengthened macro-prudential oversight to prevent the build-up of systemic risk;
    • financial regulations dampen rather than amplify economic cycles, including by building buffers of resources during the good times and measures to constrain leverage; but it is vital that capital requirements remain unchanged until recovery is assured; and,
    • strengthened international cooperation to prevent and resolve crises, including through supervisory colleges, institutional reinforcement of the FSF, and the launch of an IMF/FSF Early Warning Exercise.

  2. We have also agreed to: regulatory oversight, including registration, of all Credit Rating Agencies whose ratings are used for regulatory purposes, and compliance with the International Organisation of Securities Commissions (IOSCO) code; full transparency of exposures to off-balance sheet vehicles; the need for improvements in accounting standards, including for provisioning and valuation uncertainty; greater standardisation and resilience of credit derivatives markets; the FSF’s sound practice principles for compensation; and the relevant international bodies identify non-cooperative jurisdictions and to develop a tool box of effective counter measures.

There are some really opaque references to transparency such as "full transparency of exposures to off-balance sheet vehicles" which covers a multitude of sins and also not the slightest suggestion as to a time-line and sanctions for non compliance etc.

But the best has to be the last which refers to tax havens presumably and the suggestion that a "tool box" of counter measures will be developed for "non-cooperative jurisdictions". Which are they? Is Switzerland on this list? What kinds of things are going to be in the toolbox? Will they have any bite?

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