The second major goal is to promote consistent global enforcement of the standards. Toward this end, the Principles unify and harmonize three existing sets of standards – Core Principles for Systemically Important Payment Systems; Recommendations for Securities Settlement Systems; and Recommendations for Central Counterparties. As part of this effort, the Principles strengthen the “responsibilities of authorities.” This includes a new framework for cooperation among financial authorities. It calls for central banks, market regulators, and other relevant authorities to cooperate with each other, both domestically and internationally, and to support each other in fulfilling their respective mandates to promote the safety and efficiency of FMIs. This builds upon existing frameworks that have already been used successfully by CPSS and IOSCO for effective cooperation in the oversight of global institutions. Such cooperation can facilitate more comprehensive oversight, improve efficiency and effectiveness, reduce or eliminate any gaps in regulation, supervision, and oversight, and minimize potential duplication of effort and burden on both the FMIs and the cooperating authorities. Toward the goal of consistent global enforcement, the Principles are considered to be minimum requirements. In contrast, the three old sets of guidance were weaker, being recommendations rather than requirements. As recommendations, they could be ignored. In contrast, as the Principles make clear, countries that are members of CPSS and IOSCO are  BIS central bankers’ speeches  5  to apply the principles to “the fullest extent possible.” This means that regulation and legal frameworks are to be adjusted as needed in order to accommodate the standards.

However, the usefulness of such disclosure depends very much on the level of breakdown in the risk disclosure. Furthermore, the US President’s Working Group on Financial Markets recommends (a) a reporting framework for large hedge funds to disclose more meaningful and frequent market risk information to the public, and (b) a requirement on public companies to disclose information about their material financial exposures to HLIs. A challenge here is for other authorities to take similar steps to require such standards of disclosure, as this would help to avoid the possibility of regulatory arbitrage. At the market level, a working group set up by the G10, and led by Jean-Pierre Patat of the Banque de France, studied the feasibility of collecting and disseminating aggregate positions data in the foreign exchange market. I believe the initiative, if implemented, could have helped smaller and open markets in better understanding their currency markets and the accumulation of highly concentrated positions. However, in November 1999, the G10 Governors decided not to proceed further with work in this area. In making this determination, the G10 found that there were a number of practical limitations to the proposal, including the difficulty in obtaining compliance, the unfeasibility of producing the data in a timely manner, and the substantial costs involved. The demise of this initiative left a vacuum in the area of transparency on market concentration. This is unfortunate and the international community should explore other alternatives to bridge the information gap.