Saturday October 11, 10:28 PM
Top finance officials claim progress in tightening rules
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WASHINGTON (AFP) - An international group of finance leaders claimed progress Saturday in implementing an agreed tightening of rules even as the crisis in the markets reached unprecedented depths and intensity.
Bank of Italy governor Mario Draghi, who heads the Financial Stability Forum (FSF), said recommendations accepted in April by the Group of Seven industrialized countries were being pushed through despite the upheaval.
These included measures to strengthen standards and oversight of bank capital and liquidity, risk management, and valuation and accounting regimes.
The aim is to "to reconstruct the financial system to be immune to the root causes of the crisis ... we must have less debt and more capital," Draghi said at a news conference in conjunction with the annual meetings of the International Monetary Fund and the World Bank.
Asked about government efforts to stem the crisis, Draghi said there was a strong case for a shared approach, with joint action "really very important."
The key issue was to ensure that measures being taken were consistent across different countries so that there were no discrepancies that could be exploited, he said, adding that the FSF would monitor what was being done.
Draghi gave no examples of such a case but, earlier this month, Ireland announced a blanket guarantee of deposits at its top six banks, sparking strong protests in Britain that this could encourage savers to take their money out of British banks.
Britain, Germany and several other countries then introduced similar guarantees to protect their own banks although the emphasis since then among governments has been on trying to avoid a repeat.
In a separate report on the FSF's work, the group said that "in the immediate term, stabilizing financial systems remains the priority of all concerned.
"We will continue to oversee and coordinate implementation of the recommendations in a manner that preserves the advantages of integrated global financial markets and a level playing field across countries."
The FSF is an international group that includes central banks, the IMF and other financial and regulatory bodies that was tasked last year with drawing up an initial response to the unfolding crisis sparked by the collapse of the US subprime or higher-risk home loan market.
These mortgages to borrowers with patchy credit were packaged into other securities that were sold on through the financial system, spreading the contagion as defaults mounted in a snowballing crisis which has upturned markets and banks.
The FSF said in its report that it would also begin monitoring and addressing international efforts to stem the crisis, looking at the measures being taken.
The Group of Seven major advanced economies -- the United States, Britain, Canada, France, Germany, Italy and Japan -- agreed at a meeting Friday to use "all available tools" to tackle the crisis, promising to support major banks and prevent their failure.
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