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Washington, DC (BUSINESS WIRE) 10 October 2010

The G30, an organization of the world’s leading financial executives, who published today – “Improving the financial stability and strength: macro-level policies, tools and systems for the future” – what the political support for initiatives macroprudential the eve of the Group of 20 in Seoul, Korea, in early November

to strengthen.

“The decision to scale macro-level control system and strengthen the monitoring must now be supported at the highest political level,” said Dr. Jacob Frenkel, president and chief administration of the Group of Thirty, the publication of a major new study.

G30, an organization of the world’s leading financial executives, who published today – “Improving the financial stability and strength: macro-policy tools and systems for the future” – which aims to strengthen the support for policy initiatives before the summit of the macro-group of 20 in Seoul, Korea in early November. The G30 is a general policy as a macro stability-oriented financial system as a whole and not individual institutions or of certain economic activities in isolation.

The report notes that sound macro-policy framework is needed to ensure financial stability and prevent crises. It is imperative that the policy to develop macro-clear mandates and political independence, so that action plans throughout the system to implement preventive medicine and to provide effective action if they find that the emergence of serious risks to the system as a whole. The report highlights the role that those responsible for market discipline and decision making in the private sector can play in strengthening the resilience of the system to clarify.

Dr. Frenkel, former Governor of the Bank of Israel, and the chairman of JP Morgan Chase International, said. “Public confidence in the resilience of the financial system depends on early detection of potential crises, the United States, for example, is a debate on the causes of the recent financial crisis. We do not doubt its seriousness, if effective macroeconomic surveillance in place reduced. We are now to show support for far-reaching recommendations and urgency. “

The report introduces the concept of macro-level policy identifies the tools and institutional structures that can be used for implementation, and makes recommendations for policy-making community on improving the stability of financial system. The authors suggest that staff empowerment to improve systemic regulators with new tools for economic stability and possibly the severity of future economic crises.

The report was prepared by a working group led by Roger W. Ferguson Jr. prepared, former Vice-President of the Federal Reserve and President and CEO of TIAA-CREF. “While the regulators similar tools have that we recommend today are used, we now know that must be used with a specific mandate to consider the general good of the financial system to greater efficiency improved functionality through a regulator,” said Ferguson. “As we have seen, the emphasis on institutions and markets, the lack of a systemic view, do not guarantee financial stability and resilience.”

Jaime Caruana, a member of the Working Group and General Manager of the Bank for International Settlements said. “This is an important addition to the debate as you can see from the recommendations in this report, has recently Basel III standards for Bank capital and liquidity is a good anchor for macroeconomic conditions, regulatory. “

Paul Tucker, a member of the group of 30 working groups and vice-governor of the Bank of England, financial stability, said: “These are important recommendations that further the international debate, which earn a key moment for many countries in the process of developing macro-level frame. The authorities have to concentrate on the means of improving the resilience of our financial markets and banking systems, such as to require it to develop. And they must be equipped with the exuberance of stability at risk are poor in financial cycles. “

right tools for the job

The report suggests that officials strengthen empowerment systemic regulators with new tools for economic stability and possibly the severity of future economic downturn. The instrument address use, liquidity, credit, and supervision:

Leverage, buffer counter-cyclical capital requirements by increasing capital, stress testing and monitoring of the debt;
Liquidity: Liquidity of buffer, the ratios of the core funding or a surcharge on capital liquidity;
Credit: LTV of adjustable
Monitoring. Through more effective monitoring of market infrastructures and the implementation of the mandate

The Group of Thirty report emphasizes that political action to cope with future crises is not easy and it can be controversial. Strong action that could, for example, restrict banking activities, especially during a boom may politically difficult and unpopular, but it may occasionally be necessary.

Ideally, must act the power to be transferred to a single institution in each country. But regardless of location, the report emphasizes that the independence of the macro-level must lead to transparency and accountability to ensure legitimacy are balanced. The macro-regulatory body should operate under a clear mandate, given the political leadership of the country. This mandate, the authority and discretion are essential to achieve the macro level. “Discretion is important because it is difficult to define in advance the location and the severity of the next financial crisis,” said Ferguson.

Dr. Frenkel concluded: “To achieve our political goals macroprudential need a dialogue with other agencies on monetary, fiscal and fairly you have to respond their understanding and ability to develop because the markets..”

More information about this report, see: www.group30.org

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clear = “all”
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