mr tietmeyer reports on international cooperation and coordination in the area of financial market supervision and surveillance report by the president of the deutsche bundesbank, prof hans tietmeyer, on 11 / 02 / 99. 1. mandate issued by the g - 7 finance ministers and central bank governors in considering ways of strengthening the international financial system, the finance ministers and central bank governors of the g - 7 countries asked me at their meeting in washington on october 3, 1998 “... to consult with other appropriate bodies and to consider with them the arrangements for cooperation and coordination between the various international financial regulatory and supervisory bodies and the international financial institutions interested in such matters, and to put to us expeditiously recommendations for any new structures and arrangements that may be required ”. this mandate was restated and extended in the declaration by the g - 7 finance ministers and central bank governors on october 30, 1998 : “ we agree that better processes are needed for monitoring and promoting stability in the international financial system and for the international financial institutions, working closely with the international supervisory and regulatory bodies, to conduct surveillance of national financial sectors and their regulatory and supervisory regimes with all relevant information accessible to them. we agree therefore that we will : ( i ) support the establishment of a process for strengthened financial sector surveillance using national and international regulatory and supervisory expertise, including through a process of peer review, and the imf ’ s regular surveillance of its member countries under article iv ; ( ii ) to this end bring together the key international institutions and key national authorities involved in financial sector stability better to co - operate and to co - ordinate their activities in the management and development of policies to foster stability and reduce systemic risk in the international financial system and to exchange information more systematically on risks in the international financial system. (... ) we asked dr tietmeyer to consult the relevant international bodies on these reforms... ” in order to fulfil this mandate, i have held thorough consultations with representatives of all the g - 7 countries, the international financial institutions, and various international bodies. these consultations were helpful in identifying key areas in the international financial system where improvements are essential in order to safeguard the proper functioning of the markets. a broad consensus emerged during this consultation process and is reflected in this report. this report first describes the current international arrangements for promoting the stability of the financial system. it then sets out the areas in which improvements are needed and where action appears necessary to strengthen the sustainable

functioning of the markets. the final section sets out a proposal for improved international cooperation and coordination in the area of financial market supervision and surveillance. 2. current arrangements for the supervision and surveillance of the international financial system there are various international organisations which share responsibility for the current arrangements concerning the supervision and surveillance of the international financial system. the international financial institutions ( ifis ) contribute in various ways to strengthening the global financial system : − the international monetary fund ( imf ) has responsibility under its articles for surveillance of all member countries, and monitors developments in the global economy and financial markets ; − the ibrd ( world bank ) under its mandate uses its expertise to assist countries in the design and implementation of reforms to strengthen financial systems, including banking, capital markets and market infrastructure. in addition, − the bank for international settlements ( bis ) provides analytical, statistical and secretariat support for various official groupings working to strengthen the global financial system ; and − the organisation for economic co - operation and development ( oecd ) participates in the process of macroeconomic and financial surveillance and formulates guidelines for evaluating and improving the framework for corporate governance. the cooperation and coordination of supervisory practices are effected by various sectorspecific international groupings of regulators and supervisors. in particular, these are − the basle committee on banking supervision ( bcbs ), as an important rule - setting body in the field of banking supervision ; − the international organization of securities commissions ( iosco ), which provides mutual assistance in order to promote the integrity of securities and futures markets worldwide ; and − the international association of insurance supervisors ( iais ), which cooperates with supervisors in promoting high standards in the field of insurance supervision. moreover, there are groupings of central bank experts concerned with market infrastructure and functioning. in particular, these are − the committee on payment and settlement systems ( cpss ), which analyses payment systems and makes recommendations with the aim of reducing the risks arising in this area, and − the committee on the global financial system ( cgfs ; formerly the euro - currency standing committee ), which analyses global financial system conditions and makes recommendations for improving market functioning. current arrangements have made a significant contribution to raising standards of soundness and risk awareness in financial systems. these are remarkable achievements even though they are sector - specific in their approach. however, the pace of change in markets and financial intermediaries brought about by the process of global financial integration has increasingly exposed the limitations of such an approach. the