Any regime that had that effect would be perverse and counterproductive and undermine market discipline. We thus have a clear set of principles to guide the role of the public sector. In applying these principles, we have four clear areas of priority over the coming months and years. We urge Congress to codify some of the recommendations of the Working Group on Hedge Funds including the bill put forward by Congressman Baker. We look forward to the findings of the Financial Stability Forum working group's report on Highly Leveraged Institutions that will be published soon and will build on the findings of the President's Working Group report on Hedge Funds.
Transparency is also an international concern.
It is incumbent on all countries to promote better prudential oversight. These call upon firms to institute effective risk analysis of their portfolios, conduct realistic stress testing of their models and ensure they have adequate liquidity in the event of a crisis. To be sure, recent experience has brought a certain humility to those involved in a construction of risk management models. Not only do outlier situations occur, but traditional patterns also breakdown in times of crisis. This makes it all the more essential that risk management systems be improved, updated as necessary, and subjected to rigorous stress-testing.