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Strengthening Transparency and Accountability
Immediate Actions by March 31, 2009
1 The key global accounting standards •
bodies should work to enhance
guidance for valuation of securities,
also taking into account the valuation
of complex, illiquid products,
especially during times of stress.
•

•

2 Accounting standard setters should
significantly advance their work to
address weaknesses in accounting
and disclosure standards for offbalance sheet vehicles.

1
2

•

•

IASB and FASB have both published guidance on •
the application of fair value in illiquid market
conditions and are in the process of enhancing
guidance for fair value measurement and disclosure
more generally, with further work expected in the
•
first half on 2009.
BCBS has consulted on enhanced guidance on
valuation practices for financial instruments and will
issue final guidance in April.
•
Several accounting standard setters have published
guidance to clarify expectations for the valuation of
complex securities and other financial instruments
during autumn 2008.
The IASB issued, for public comment, proposed
•
accounting changes for consolidation of off-balance
sheet entities. This revised standard is expected to
be effective in 2011.
IASB has also accelerated its de-recognition project
and expects to publish an exposure draft in the first
half of 2009.

Leaders call on the accounting standard setters to
work urgently with supervisors and regulators to
improve accounting standards for provisioning, offbalance sheet exposures and valuation uncertainty.
Leaders have agreed that the accounting standard
setters should improve standards for the valuation of
financial instruments based on their liquidity and
investors’ holding horizons, while reaffirming the
framework of fair value accounting.
Leaders have agreed that accounting standard setters
should take action by the end of 2009 to strengthen
accounting recognition of loan-loss provisions by
incorporating a broader range of credit information.
Leaders have agreed that accounting standard setters
should take action by the end of 2009 to improve
accounting standards for off-balance sheet exposures.

Actions taken prior to the leaders’ statements.
Actions and commitments to be pursued following the London Summit.

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3 Regulators and accounting standard
setters should enhance the required
disclosure of complex financial
instruments by firms to market
participants.

•

•

•

4 With a view toward promoting financial •
stability, the governance of the
international accounting standard
setting body should be further
enhanced, including by undertaking a
review of its membership, in particular
in order to ensure transparency,
accountability, and an appropriate
relationship between this independent
body and the relevant authorities.
•

•
•

Next Steps2

National supervisors are enforcing the best practice •
for risk disclosures set out in the FSF's April 2008
report, including in relation to complex financial
instruments. The FSF is monitoring the
implementation of these standards.
IASB has released several proposals to improve
disclosures of financial instruments, including
improving the information about fair value
measurement and liquidity risk.
IOSCO is reviewing private sector initiatives to
enhance transparency in the securitisation markets
and will produce an interim report in April.

Continued implementation and monitoring.

The Trustees of the International Accounting
•
Standard Committee Foundation (IASCF) have
agreed to establish a formal link to a newly created
external Monitoring Board composed of public
authorities, including the chairs of the expanded
IOSCO Technical Committee and the IOSCO
Emerging Markets Committee. The Monitoring
Board had its first meeting on 1 April 2009. The
success of the monitoring body will be reviewed by
summer 2010.
Members also approved to expand the International
Accounting Standard Board (IASB) membership to
16 members and provided guidelines regarding
geographic diversity.
Brazil, China and India have accepted IOSCO's
invitation to join its Technical Committee.
Basel Committee on Banking Supervision has
expanded its membership to include Australia,
Brazil, China, Korea, India, Mexico and Russia

Leaders have agreed that accounting standard setters
should, within the framework of the independent
accounting standard setting process, improve
involvement of stakeholders, including prudential
regulators and emerging markets, through the IASB’s
constitutional review.

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5 Private sector bodies that have
•
already developed best practices for
private pools of capital and/or hedge
funds should bring forward proposals
for a set of unified best practices.
Finance Ministers should assess the
adequacy of these proposals, drawing •
upon the analysis of regulators, the
expanded FSF, and other relevant
bodies.

Progress1

Next Steps2

The Alternative Investment Managers' Association, •
the Managed Funds Association and the members
of the Asset Managers Committee established by
The President's Working Group on Financial
Markets are committed to publish jointly a common •
set of principles by the end of April.
IOSCO published a consultation document on
hedge fund oversight in March.

•

Leaders agree to extend regulation and oversight to all
systemically important financial institutions,
instruments and markets. This will include, for the first
time, systemically important hedge funds.
Leaders have agreed that hedge funds or their
managers will be registered and will be required to
disclose appropriate information on an ongoing basis
to supervisors or regulators, including on their
leverage, necessary for assessment of the systemic
risks that they pose individually or collectively. Where
appropriate, registration should be subject to a
minimum size. They will be subject to oversight to
ensure that they have adequate risk management.
Leaders ask the FSB to develop mechanisms for
cooperation and information sharing between relevant
authorities in order to ensure that effective oversight is
maintained where a fund is located in a different
jurisdiction from the manager. Leaders will,
cooperating through the FSB, develop measures that
implement these principles by the end of 2009. They
call on the FSB to report to the next meeting of our
Finance Ministers and Central Bank Governors.
Leaders have agreed that supervisors should require
that institutions which have hedge funds as their
counterparties have effective risk management. This
should include mechanisms to monitor the funds’
leverage and set limits for single counterparty
exposures.

Medium Term Actions
6 The key global accounting standards •
bodies should work intensively toward
the objective of creating a single highquality global standard.

IFRS are in use in over 100 countries, and about 40 •
more are in the process of either adopting or
converging with them.
•

Leaders have called on the accounting standard
setters to work urgently with supervisors and
regulators to improve standards on valuation and
provisioning and achieve a single set of high-quality
global accounting standards.
Leaders have agreed that accounting standard setters

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should take action to reduce the complexity of
accounting standards for financial instruments.

7 Regulators, supervisors, and
accounting standard setters, as
appropriate, should work with each
other and the private sector on an
ongoing basis to ensure consistent
application and enforcement of highquality accounting standards.

•

•

8 Financial institutions should provide •
enhanced risk disclosures in their
reporting and disclose all losses on an
ongoing basis, consistent with
international best practice, as
appropriate. Regulators should work
to ensure that a financial institution’
financial statements include a
complete, accurate, and timely picture
of the firm’s activities (including offbalance sheet activities) and are
reported on a consistent and regular
basis.

The IASB has established an external monitoring
•
body composed of representatives of public
authorities and of international organisations that
have requirements for accountability to public
authorities. This monitoring body includes IOSCO,
the European Commission, the US SEC, and the
Japan FSA. The BCBS will also be participating as
an observer.
In addition the IASB and the FASB have
established an advisory group comprised of senior
leaders with broad international experience in
financial markets to advise the Boards in
considering accounting issues emerging from the
global crisis.

Leaders have agreed that accounting standard setters
should take action by the end of 2009 to achieve
clarity and consistency in the application of valuation
standards internationally, working with supervisors. .

National supervisors are enforcing the best practice •
for risk disclosures set out in the FSF's April 2008
report, including in relation to complex financial
instruments. The FSF is monitoring the application
of these standards.

Continued implementation and monitoring.

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Regulatory Regimes
Immediate Actions by March 31, 2009
9 The IMF, expanded FSF, and other
•
regulators and bodies should develop
recommendations to mitigate procyclicality, including the review of how
valuation and leverage, bank capital,
executive compensation, and
provisioning practices may exacerbate
cyclical trends.
•

The FSF and its members have formed three
workstreams to study the forces that contribute to
procyclicality in the financial system and examine
possible options for mitigating them, drawing on a
framework paper prepared by the BIS. These
workstreams have focused on (i) bank capital, (ii)
loan loss provisioning, and (iii) the interaction of
valuation and leverage practices.
The FSF has published recommendations on
procyclicality.

•
•

•

Leaders have agreed that, in future, regulation must
prevent excessive leverage and require buffers of
resources to be built up in good times.
Leaders have agreed that the FSB, BCBS, and CGFS,
working with accounting standard setters, should take
forward, with a deadline of end 2009, implementation
of the recommendations to mitigate procyclicality,
including a requirement for banks to build buffers of
resources in good times that they can draw down
when conditions deteriorate.
Leaders have agreed that risk-based capital
requirements should be supplemented with a simple,
transparent, non-risk based measure which is
internationally comparable, properly takes into account
off-balance sheet exposures, and can help contain the
build-up of leverage in the banking system.

Medium Term Actions
10 To the extent countries or regions
•
have not already done so, each
country or region pledges to review
and report on the structure and
principles of its regulatory system to
ensure it is compatible with a modern
and increasingly globalized financial
system. To this end, all G-20
•
members commit to undertake a
Financial Sector Assessment Program
(FSAP) report and support the
transparent assessments of countries’
national regulatory systems.

The IMF and the World Bank are continuing to
•
enhance the analytical framework for financial
sector assessments. For instance, they are
focusing more on systemic linkages and dynamics,
and are taking a more systematic approach to
stability and developmental assessments to
•
enhance their comparability across countries.
IOSCO and the IAIS have developed selfassessment frameworks that can be used to identify
areas for enhancement in preparing for the FSAP.

Members of the FSB agree to undergo periodic peer
reviews, using among other evidence IMF / World
Bank public Financial Sector Assessment Program
reports. The FSB will elaborate and report on these
commitments and the evaluation process.
WG1 recommends that, to improve the FSAP process,
the basis upon which countries are assessed should
be expanded to encompass macroprudential oversight,
the scope of regulation, and supervisory oversight of
the influence of the structure of compensation
schemes at financial institutions on risk taking.

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11 The appropriate bodies should review •
the differentiated nature of regulation
in the banking, securities, and
insurance sectors and provide a report
outlining the issue and making
•
recommendations on needed
improvements. A review of the scope
of financial regulation, with a special
emphasis on institutions, instruments,
and markets that are currently
unregulated, along with ensuring that •
all systemically-important institutions
are appropriately regulated, should
•
also be undertaken.

Progress1

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The Joint Forum, a Working Group of the BCBS,
• Leaders have agreed to extend regulation and
IOSCO, and the IAIS, is undertaking a project that
oversight to all systemically important financial
addresses the differentiated nature and scope of
institutions, instruments and markets. This will include,
financial regulation.
for the first time, systemically important hedge funds.
An IOSCO Task Force is exploring whether and
how to extend key regulatory principles applying to In particular leaders have agreed:
regulated products and markets, in the areas of
• to amend regulatory systems to ensure authorities are
transparency, market conduct, and market
able to identify and take account of macro-prudential
infrastructure, to securitized products and CDS.
risks across the financial system including in the case
An interim report will be published in April.
of regulated banks, shadow banks, and private pools
of capital to limit the build up of systemic risk. Leaders
IOSCO has published a consultation document on
call on the FSB to work with the BIS and international
hedge fund oversight in March.
standard setters to develop macro-prudential tools and
The IAIS is elaborating its medium-to long-term
provide a report by autumn 2009;
strategic focus through examining issues related to
the supervision of internationally active insurance • large and complex financial institutions require
particularly careful oversight given their systemic
groups, macro elements of prudential supervision
importance;
including contagion effects and the issue of non• to ensure that national regulators possess the powers
regulated entities and regulatory consistency
across financial sectors. A report is expected in
for gathering relevant information on all material
June 2009.
financial institutions, markets, and instruments in order
to assess the potential for their failure or severe stress
to contribute to systemic risk. This will be done in close
coordination at international level in order to achieve
as much consistency as possible across jurisdictions;
• that in order to prevent regulatory arbitrage, the IMF
and the FSB will produce guidelines for national
authorities to assess whether a financial institution,
market, or an instrument is systemically important by
the next meeting of our Finance Ministers and Central
Bank Governors. These guidelines should focus on
what institutions do rather than their legal form; and
• to review and adapt the boundaries of the regulatory
framework regularly to keep pace with developments
in the financial system and promote good practices
and consistent approaches at the international level.

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12 National and regional authorities
•
should review resolution regimes and
bankruptcy laws in light of recent
experience to ensure that they permit
an orderly wind-down of large
complex cross-border financial
institutions.
13 Definitions of capital should be
•
harmonized in order to achieve
consistent measures of capital and
capital adequacy.

Progress1

Next Steps2

The BCBS’s Cross-border Bank Resolution Group •
is developing recommendations for resolution
regimes. The IMF and World Bank have also issued
papers addressing national bank insolvency
regimes.

Leaders have agreed to support continued efforts by
the IMF, FSB, World Bank and BCBS to develop an
international framework for cross-border bank
resolution arrangements.

The BCBS is considering various measures to
•
promote the quality of capital, in particular, ordinary
shares and reserves in the Tier 1 capital base and
enhancing the global consistency of minimum
capital requirements. The definition of capital is
•
being reviewed as part of this work in order to
achieve global consistency.

Leaders have agreed to take action, once recovery is
assured, to improve the quality, quantity, and
international consistency of capital in the banking
system.
Guidelines for harmonisation of the definition of capital
should be produced by end 2009

Prudential Oversight
Immediate Actions by March 31, 2009
14 Regulators should take steps to
•
ensure that credit rating agencies
meet the highest standards of the
international organization of securities
regulators and that they avoid conflicts
of interest, provide greater disclosure
to investors and to issuers, and
differentiate ratings for complex
products. This will help ensure that
credit rating agencies have the right
incentives and appropriate oversight
to enable them to perform their
important role in providing unbiased
information and assessments to
markets.

All major credit rating agencies (CRAs) have
adopted codes of conduct based on the revised
IOSCO Code of Conduct Fundamentals for Credit
Rating Agencies.

15 The international organization of
•
securities regulators should review
credit rating agencies’ adoption of the

IOSCO has reviewed the extent to which these
•
agencies’ own codes satisfy its guidelines. Its report
indicates that the large global CRAs have largely

•

Leaders have agreed to extend regulatory oversight
and registration to Credit Rating Agencies to ensure
they meet the international code of good practice,
particularly to prevent unacceptable conflicts of
interest.

No further action at this stage.

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standards and mechanisms for
monitoring compliance.

•
16 Authorities should ensure that
financial institutions maintain
adequate capital in amounts
necessary to sustain confidence.
International standard setters should
set out strengthened capital
requirements for banks’ structured
credit and securitisation activities.

•
•
•

•
•

Next Steps2

adopted the changes to the Code or, in certain
instances, such as in relation to considering a
separate rating scale or subscript for structured
products, have clearly explained why they have not
adopted that part of the Code.
IOSCO has finalised a common monitoring module
for CRAs
National authorities have taken a number of steps, • Leaders have agreed to take action, once recovery is
appropriate to national circumstances to ensure that
assured, to improve the quality, quantity, and
banks have adequate capital.
international consistency of capital in the banking
system. In future, regulation must prevent excessive
Capital buffers above the regulatory minimum are
leverage and require buffers of resources to be built up
designed to absorb losses and support continued
in good times.
lending to the economy.
The BCBS has issued consultation proposals to
Leaders have further agreed that:
strengthen the risk capture of the Basel II
framework, including enhancements to the capital • until recovery is assured the international standard for
the minimum level of capital should remained
treatment of securitisations, off-balance sheet
unchanged;
exposures and trading book activities.
BCBS is working on a number of other initiatives to • where appropriate, capital buffers above the required
minima should be allowed to decline to facilitate
enhance the capital framework.
lending in deteriorating economic conditions;
The IAIS is working to assess issues that have
emerged from the financial crisis with respect to the • once recovery is assured, prudential regulatory
standards should be strengthened. Buffers above
assessment of the solvency of insurance companies
regulatory minima should be increased and the quality
and the group-wide solvency requirements for
of capital should be enhanced. Guidelines for
internationally active insurance groups.
harmonisation of the definition of capital should be
produced by end 2009. The BCBS should review
minimum levels of capital and develop
recommendations in 2010.

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17 Supervisors and regulators, building •
on the imminent launch of central
counterparty services for credit default
swaps (CDS) in some countries,
should: speed efforts to reduce the
systemic risks of CDS and over-the- •
counter (OTC) derivatives
transactions; insist that market
•
participants support exchange traded
or electronic trading platforms for CDS
contracts; expand OTC derivatives
market transparency; and ensure that
the infrastructure for OTC derivatives •
can support growing volumes.

Progress1

Next Steps2

Substantial steps have been taken to reduce
•
operational risks. Derivative transaction
confirmation lags have fallen and tear up exercises
have greatly reduced gross derivative contracts
outstanding.
Market participants have developed several central
clearing facilities for credit derivatives.
•
ISDA has published a protocol specifying standard
guidance on settlement procedures for CDS
following credit events and is currently working with
industry to incorporate this protocol into
standardised documentation.
International regulators of CDS CCPs are working •
together to advance regulatory cooperation and
information sharing and ensure that CCPs meet
robust standards.
•

Leaders have agreed to promote the standardisation
and resilience of credit derivatives markets, in
particular through the establishment of central clearing
counterparties subject to effective regulation and
supervision. Leaders call on the industry to develop an
action plan on standardisation by autumn 2009.
WG1 recommends that financial institutions should
continue to work to strengthen the infrastructure
supporting OTC derivatives markets. For credit
derivatives, this should include standardizing contracts
to facilitate central counterparty clearing for eligible
contracts.
WG1 recommends that central counterparties should
be subject to transparent and effective oversight by
prudential supervisors and other relevant authorities,
including central banks, and meet high standards in
terms of risk management, operational arrangements,
default procedures, fair access and transparency.
WG1 recommends that, in order to ensure that the
infrastructure for central clearing and settlements for
credit derivatives meets high prudential standards, a
review of the CPSS-IOSCO Recommendations for
Central Counterparties and the accompanying
guidance be undertaken and that prudential
supervisors apply these standards.

Medium Term Actions
18 Credit Ratings Agencies that provide •
public ratings should be registered.

Several G20 countries and regions are taking action •
to introduce registration requirements based on
compliance with the IOSCO Code.

•

Leaders have agreed that all Credit Rating Agencies
whose ratings are used for regulatory purposes should
be subject to a regulatory oversight regime that
includes registration. The regulatory oversight regime
should be established by end 2009 and should be
consistent with the IOSCO Code of Conduct
Fundamentals. IOSCO should coordinate full
compliance.
Leaders have agreed that national authorities will

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•

19 Supervisors and central banks should
develop robust and internationally
consistent approaches for liquidity
supervision of, and central bank
liquidity operations for, cross-border
banks.

enforce compliance and require changes to a rating
agency’s practices and procedures for managing
conflicts of interest and assuring the transparency and
quality of the rating process. In particular, Credit
Rating Agencies should differentiate ratings for
structured products and provide full disclosure of their
ratings track record and assumptions that underpin the
ratings process. The oversight framework should be
consistent across jurisdictions with appropriate sharing
of information between national authorities, including
through IOSCO.
Leaders have agreed that the Basel Committee should
take forward its review on the role of external ratings in
prudential regulation and determine whether there are
any adverse incentives that need to be addressed.

•

Leaders have agreed that the BCBS and national
authorities should develop and agree by 2010 a global
framework for promoting stronger liquidity buffers at
financial institutions, including cross-border institutions.

•

Ongoing work at national and international levels.

Risk Management
Immediate Actions by March 31, 2009
20 Regulators should develop enhanced •
guidance to strengthen banks’ risk
management practices, in line with
international best practices, and
•
should encourage financial firms to reexamine their internal controls and
implement strengthened policies for
sound risk management.

Basel Committee is enhancing guidance for
supervisory oversight in a number of important
risk management areas.
The Basel Committee has also issued Principles
for Sound Liquidity Risk Management and
Supervision.

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21 Regulators should develop and
•
implement procedures to ensure that
financial firms implement policies to
better manage liquidity risk, including
by creating strong liquidity cushions.

G20 members are taking steps to implement the
Basel Committee's Principles for Sound Liquidity
Risk Management and Supervision in national
regulatory frameworks.

22 Supervisors should ensure that
•
financial firms develop processes that
provide for timely and comprehensive
measurement of risk concentrations
and large counterparty risk positions
across products and geographies.

Supervisors are required to review firms' processes •
for timely and comprehensive measurement of risk
concentrations and large counterparty risk positions
across products and geographies under Pillar 2 of
the Basel II Accord. National and regional
authorities are taking steps to develop robust and
comprehensive guidelines in this regard.

23 Firms should reassess their risk
•
management models to guard against
stress and report to supervisors on
their efforts.

The Senior Supervisors Group is undertaking an
assessment of major institutions' strengths,
weaknesses and gaps in relation to the
recommendations for strengthened risk
management practices that have been made in
recent public and private sector reports.
The BCBS has issued for consultation guidance
for supervisory oversight in a number of important
risk management areas.

•

BCBS has issued for consultation supervisory
guidance for improving banks' stress testing
practices.

•

•

24 The Basel Committee should study
the need for and help develop firms’
new stress testing models, as
appropriate.

•

25 Financial institutions should have
•
clear internal incentives to promote
stability, and action needs to be taken,
through voluntary effort or regulatory
action, to avoid compensation
schemes which reward excessive
short-term returns or risk taking.

•

•

The FSF has published Principles for Sound
•
Compensation Practices for financial institutions to
prevent incentives towards excessive risk taking
that may arise from compensation schemes.
•

Leaders have agreed that the BCBS and national
authorities should develop and agree by 2010 a global
framework for promoting stronger liquidity buffers at
financial institutions, including cross-border institutions.

The BCBS will review existing guidelines in 2009.

Ongoing action by firms and supervisors drawing on
these recommendations.
Senior Supervisors Group to release a summary of its
findings in early 2009.

Consultation ongoing.

Leaders have agreed to endorse and implement the
FSF’s tough new principles on pay and compensation
and to support sustainable compensation schemes
and the corporate social responsibility of all firms.
Leaders have agreed that national supervisors should
ensure significant progress in the implementation of
these principles by the 2009 remuneration round. The
BCBS should integrate these principles into their risk

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•

26 Banks should exercise effective risk •
management and due diligence over
structured products and securitisation.
•

With a view to improving the functioning of the
•
securitisation markets, market participants have
taken a number of steps to enhance the
transparency of securitisation markets and promote
improved due diligence.
The BCBS issued a consultation document in
January 2009, which includes enhanced guidelines.

management guidance by autumn 2009.
Supervisors will assess firms’ compensation policies
as part of their overall assessment of their soundness.
Where necessary they will intervene with responses
that can include increased capital requirements.
Leaders have agreed that the BCBS and authorities
should take forward work on improving incentives for
risk management of securitisation, including
considering due diligence and quantitative retention
requirements, by 2010.

Medium Term Actions
27 International standard setting bodies,
working with a broad range of
economies and other appropriate
bodies, should ensure that regulatory
policy makers are aware and able to
respond rapidly to evolution and
innovation in financial markets and
products.
28 Authorities should monitor substantial •
changes in asset prices and their
implications for the macroeconomy
•
and the financial system.

•

WG2 recommends that the IMF and FSF monitor
•
asset prices as part of its work on early warning.
WG2 also recommends that the relevant
international bodies, in particular the Bank for
International Settlements (BIS) together with the
Committee on the Global Financial System (CGFS)
and the IMF, produce a report on how authorities
are currently monitoring and addressing asset
prices and to develop recommendations in light of
the current crisis. A report should be presented to
the next meeting of G20 Finance Ministers and
Central Bank Governors.

The FSB will monitor and advise on market
developments and their implications for regulatory
policy.

Ongoing action by authorities.

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Promoting Integrity in Financial Markets
Immediate Actions by March 31, 2009
•

FSF has set up a Crisis Management Contact List •
including relevant authorities from 35 countries,
International Financial Institutions (IFIs) and critical
global financial service providers.
The IAIS is taking steps to expedite the operation
of its MMoU framework that was put in place in
February 2007 in order to facilitate information
exchange among insurance supervisors both
under normal circumstances and in times of crisis.
IOSCO is also working on the global adoption of its
MMoU Concerning Consultation and Cooperation
and the Exchange of Information.
The FSF principles for cross-border crisis
management and protocols for supervisory
colleges support enhanced information sharing
arrangements.

Leaders have agreed that the FSB will promote coordination and information exchange among
authorities responsible for financial stability.

30 National and regional authorities should •
work to promote information sharing
about domestic and cross-border threats
to market stability and ensure that
national (or regional, where applicable)
legal provisions are adequate to address
these threats.

The FSF has published principles for cross-border •
crisis management.

Leaders have agreed to implement the FSF
principles for cross-border crisis management
immediately, and that home authorities of each
major international financial institution should ensure
that the group of authorities with a common interest
in that financial institution meet at least annually.

31 National and regional authorities should •
also review business conduct rules to
protect markets and investors, especially
against market manipulation and fraud
and strengthen their cross-border
cooperation to protect the international
financial system from illicit actors. In
case of misconduct, there should be an
appropriate sanctions regime.

The IOSCO Task Force on Short Selling proposed •
four high level principles for the effective regulation
of short selling in March. This forms the basis of
ongoing consultation.

Next steps to follow consultation.

29 Our national and regional authorities
should work together to enhance
regulatory cooperation between
jurisdictions on a regional and
international level.

•

•
•

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Medium term actions
32 National and regional authorities should
implement national and international
measures that protect the global financial
system from uncooperative and nontransparent jurisdictions that pose risks
of illicit financial activity.

•

•

•

•

33 The Financial Action Task Force should
continue its important work against
money laundering and terrorist financing,
and we support the efforts of the World
Bank - UN Stolen Asset Recovery (StAR)
Initiative.

•

•

Leaders have called on all jurisdictions to adhere to
the international standards in the prudential, tax, and
AML/CFT areas. To this end, they have called on the
appropriate bodies to conduct and strengthen
objective peer reviews, based on existing processes,
including through the FSAP process.
Leaders have called on countries to adopt the
international standard for information exchange
endorsed by the G20 in 2004 and reflected in the UN
Model Tax Convention. Leaders welcomed the new
commitments made by a number of jurisdictions and
encourage them to proceed swiftly with
implementation.
Leaders stand ready to take agreed action against
those jurisdictions which do not meet international
standards in relation to tax transparency. To this
end, they have agreed to develop a toolbox of
effective counter measures for countries to consider.
Leaders have committed to strengthened adherence
to international prudential regulatory and supervisory
standards. The IMF and the FSB in cooperation with
international standard-setters will provide an
assessment of implementation by relevant
jurisdictions, building on existing FSAPs where they
exist. Leaders have called on the FSB to develop a
toolbox of measures to promote adherence to
prudential standards and cooperation with
jurisdictions.
Leaders have agreed that the FATF should revise
and reinvigorate the review process for assessing
compliance by jurisdictions with AML/CFT standards,
using agreed evaluation reports where available.
Leaders call upon the FSB and the FATF to report to
the next G20 Finance Ministers’ and Central Bank
Governors’ meeting on adoption and implementation
by countries.

14

Progress Report on the Actions of the Washington Action Plan
2 April 2009
•

34 Tax authorities, drawing upon the work of
relevant bodies such as the Organization
for Economic Cooperation and
Development (OECD), should continue
efforts to promote tax information
exchange. Lack of transparency and a
failure to exchange tax information
should be vigorously addressed.

•

•

Leaders agreed to take action against noncooperative jurisdictions, including tax havens.
Leaders stand ready to deploy sanctions to protect
our public finances and financial systems.
Leaders call on countries to adopt the international
standard for information exchange endorsed by the
G20 in 2004 and reflected in the UN Model Tax
Convention.
Leaders stand ready to take agreed action against
those jurisdictions which do not meet international
standards in relation to tax transparency. To this
end they have agreed to develop a toolbox of
effective counter measures for countries to consider.

Reinforcing International Cooperation
Immediate Actions by March 31, 2009
35 Supervisors should collaborate to
•
establish supervisory colleges for all
major cross-border financial institutions,
as part of efforts to strengthen the
•
surveillance of cross-border firms. Major
global banks should meet regularly with
their supervisory college for
comprehensive discussions of the firm’s
activities and assessment of the risks it
faces.

Supervisory colleges have been established for the •
majority of the most systemically important firms
identified by the FSF.
The FSF has developed protocols for the
establishment and operation of supervisory
colleges.

Leaders have agreed to establish the remaining
supervisory colleges for significant cross-border
firms by June 2009, building on the 28 already in
place.

36 Regulators should take all steps
•
necessary to strengthen cross-border
crisis management arrangements,
including on cooperation and
communication with each other and with
appropriate authorities, and develop
comprehensive contact lists and conduct
simulation exercises, as appropriate.
Medium term actions

FSF has published principles for cross-border
cooperation on crisis management.

•

Leaders have agreed to implement the FSF
principles for cross-border crisis management
immediately, and that home authorities of each
major international financial institution should ensure
that the group of authorities with a common interest
in that financial institution meet at least annually.

15

Progress Report on the Actions of the Washington Action Plan
2 April 2009
37 Authorities, drawing especially on the
•
work of regulators, should collect
information on areas where convergence
in regulatory practices such as
accounting standards, auditing, and
deposit insurance is making progress, is
in need of accelerated progress, or
where there may be potential for
progress.
38 Authorities should ensure that temporary •
measures to restore stability and
confidence have minimal distortions and
are unwound in a timely, well-sequenced
and coordinated manner.

•
•

The FSF has discussed the work of standard
•
setting bodies with respect to convergence of
international accounting standards, audit practices
and deposit insurance arrangements.

The IMF will assess the progress with international
convergence in the provision of deposit insurances,
drawing on the International Association of Deposit
Insurers’ (IADI’s) Core Principles for Effective
Deposit Insurance Arrangements. Such efforts will
identify gaps and highlight best practices in terms of
regulatory cooperation.

The BIS, in cooperation with the CGFS, is
•
developing a database on emergency measures to
identify areas where differences may be creating
distortions. The FSB will analyse how the
measures interact, and how eventually exit
strategies need to be coordinated to minimise
market uncertainty, competitive inequality and
arbitrage opportunities.
The OECD will also consider how to safeguard
competition principles in the emergency measures
for financial sector rescues and restructurings.
Further work on the subject of exit strategies is also
expected from the IMF.

Leaders have agreed the importance of further work
and international cooperation on the subject of exit
strategies.

Reforming International Financial Institutions
Immediate Actions by March 31, 2009
39 The FSF should expand to a broader
membership of emerging economies.

•

The FSF has agreed to expand and invited as new •
members the G20 countries that are not currently
in the FSF. These are Argentina, Brazil, China,
India, Indonesia, Korea, Mexico, Russia, Saudi
Arabia, South Africa, and Turkey. In addition,
Spain and the European Commission will also
•
become FSB members.

Leaders have agreed to establish a new Financial
Stability Board (FSB) with a strengthened mandate,
as the successor to Financial Stability Forum (FSF),
and including all G20 countries, FSF members,
Spain, and the European Commission.
Members of the FSB commit to pursue the
maintenance of financial stability, enhance the
openness and transparency of the financial sector,
and implement international financial standards
(including the 12 key International Standard and
Codes), and agree to undergo periodic peer
reviews, using among other evidence IMF / World
Bank public Financial Sector Assessment Program
reports. The FSB will elaborate and report on these

16

Progress Report on the Actions of the Washington Action Plan
2 April 2009
commitments and the evaluation process.

40 The IMF, with its focus on surveillance, •
and the expanded FSF, with its focus on
standard setting, should strengthen their •
collaboration, enhancing efforts to better
integrate regulatory and supervisory
responses into the macro-prudential
policy framework and conduct early
warning exercises.

Both the IMF and the FSB are enhancing their
processes and capabilities for early warning.
An IMF/FSB Early Warning Exercise will be
launched and will be conducted regularly.

•

Leaders have agreed that the FSB should
collaborate with the IMF to provide early warning on
macroeconomic and financial risks and the actions
needed to address them.

41 The IMF, given its universal membership •
and core macro-financial expertise,
should, in close coordination with the
FSF and others, take a leading role in
drawing lessons from the current crisis,
consistent with its mandate.

The IMF and FSF have undertaken work to
analyse the causes of the crisis and on drawing
lessons.

•

Leaders welcome the FSB’s and IMF’s commitment
to intensify their collaboration, each complementing
the other’s role and mandate.

42 We should review the adequacy of the •
resources of the IMF, the World Bank
Group and other multilateral
development banks and stand ready to
increase them where necessary. The
IFIs should also continue to review and
adapt their lending instruments to
•
adequately meet their members’ needs
and revise their lending role in the light of
the ongoing financial crisis.

G20 Finance Ministers and Central Bank
• Leaders agreed to make available an additional
Governors agreed on the urgent need to increase
$850 billion of resources through the global financial
IMF resources very substantially. This could
institutions to support growth in emerging market
include further bilateral support, a significantly
and developing countries by helping to finance
expanded and increased New Arrangements to
counter-cyclical spending, bank recapitalisation,
Borrow.
infrastructure, trade finance, balance of payments
support, debt rollover, and social support.
G20 Finance Ministers and Central Bank
Governors agreed on the urgent need to ensure
that all Multilateral Development Banks have the To this end:
capital they need, beginning with a substantial
• Leaders agreed to increase the resources available
capital increase for the Asian Development Bank,
to the IMF through immediate financing from
and put it to best use to help the world's poorest.
members of $250 billion, subsequently incorporated
into an expanded and more flexible New
G20 Finance Ministers and Central Bank
Arrangements to Borrow, increased by up to $500
Governors welcomed the progress by the IMF and
billion, and to consider market borrowing if
World Bank in introducing new and enhanced
necessary.
instruments, including the development of a new
• Leaders supported a substantial increase in lending
high-access, quick-disbursing precautionary
facility.
of at least $100 billion by the Multilateral

•

17

Progress Report on the Actions of the Washington Action Plan
2 April 2009

•

•

•

•

Development Banks (MDBs), including to low
income countries, and ensure that all MDBs,
including have the appropriate capital.
Leaders supported a 200 per cent general capital
increase at the Asian Development Bank and
reviews of the need for capital increases at the
Inter-American Development Bank, the African
Development Bank and the European Bank for
Reconstruction and Development.
Leaders will ensure availability of at least $250 billion
over the next two years to support trade finance
through our export credit and investment agencies
and through the MDBs. Leaders committed to asking
regulators to make use of available flexibility in capital
requirements for trade finance.
Leaders welcomed the progress made by the IMF
with its new Flexible Credit Line (FCL) and its
reformed lending and conditionality framework
which will enable the IMF to ensure that its facilities
address effectively the underlying causes of
countries’ balance of payments financing needs,
particularly the withdrawal of external capital flows
to the banking and corporate sectors.
Leaders agreed to support a general SDR allocation
which will inject $250 billion into the world economy
and increase global liquidity, and urgent ratification of
the Fourth Amendment.

18

Progress Report on the Actions of the Washington Action Plan
2 April 2009
43 We should explore ways to restore
emerging and developing countries’
access to credit and resume private
capital flows which are critical for
sustainable growth and development,
including ongoing infrastructure
investment.

•

•

•

•

•

•

Leaders reaffirmed their historic commitment to
meeting the Millennium Development Goals and to
achieving respective ODA pledges, including
commitments on Aid for Trade, debt relief, and the
Gleneagles commitments, especially to subSaharan Africa.
Actions and decisions agreed by Leaders will
provide $50 billion to support social protection,
boost trade and safeguard development in low
income countries, as part of the significant increase
in crisis support for these and other developing
countries and emerging markets.
Leaders made available resources for social
protection for the poorest countries, including
through investing in long-term food security and
through voluntary bilateral contributions to the World
Bank’s Vulnerability Framework, including the
Infrastructure Crisis Facility, and the Rapid Social
Response Fund.
Leaders agreed a doubling of the IMF’s
concessional lending capacity for low income
countries and a doubling of access limits, within the
Debt Sustainability Framework. Leaders committed,
consistent with the new income model, that
additional resources from agreed sales of IMF gold
will be used, together with surplus income, to
provide $6 billion additional concessional and
flexible finance for the poorest countries over the
next 2 to 3 years. Leaders called on the IMF to
come forward with concrete proposals at the Spring
Meetings.
Leaders agreed to review the flexibility of the Debt
Sustainability Framework and call on the IMF and
World Bank to report to the IMFC and Development
Committee at the Annual Meetings.
Leaders called on the UN, working with other global
institutions, to establish an effective mechanism to
monitor the impact of the crisis on the poorest and
most vulnerable.

19

Progress Report on the Actions of the Washington Action Plan
2 April 2009
44 In cases where severe market
•
disruptions have limited access to the
necessary financing for counter-cyclical
fiscal policies, multilateral development
banks must ensure arrangements are in
place to support, as needed, those
countries with a good track record and
sound policies.

The World Bank and Regional Development Banks •
have begun enhancing their lending instruments to
provide more and better counter-cyclical support.
•

Leaders agreed that individual country limits on
World Bank lending should be increased, as
appropriate, to enable large countries to access
required levels of finance and so support stability
and recovery in their regions
Leaders agreed that low income IDA countries with
sustainable debt positions and sound policies should
be given temporary access to non-concessional
IBRD lending to compensate for the loss of access
to capital markets, and IDA resources should be
frontloaded, using the existing flexibility in the Debt
Sustainability Framework.

Medium term actions
45 We underscored that the Bretton Woods •
Institutions must be comprehensively
reformed so that they can more
adequately reflect changing economic
weights in the world economy and be
more responsive to future challenges.
Emerging and developing economies
•
should have greater voice and
representation in these institutions.

The first phase of World Bank voice reform was
• Leaders agreed to reform the IFI’s mandates, scope
agreed last autumn to give more decision making
and governance to reflect changes in the world
power to the poorest countries through additional
economy and the new challenges of globalisation,
votes and a third African seat on the Executive
and that emerging and developing economies,
Board. The World Bank is currently implementing
including the poorest, must have greater voice and
and ratifying this package of reforms.
representation. This must be accompanied by action
to increase the credibility and accountability of the
G20 Finance Ministers and Central Bank
institutions through better strategic oversight and
Governors agreed the need to strengthen the
decision making.
effectiveness and legitimacy of the IFIs through
enhancing their governance and ensuring they fully
To this end:
reflect changes in the world economy. G20
Finance Ministers and Central Bank Governors
• Leaders committed to implementing the package of
agreed the package of quota and voice measures
IMF quota and voice reforms agreed in April 2008
decided in April 2008 should be swiftly
and called on the IMF to complete the next review of
implemented.
quotas by January 2011;
• Leaders agreed that, alongside this, consideration
should be given to greater involvement of the Fund’s
Governors in providing strategic direction to the IMF
and increasing its accountability;
• Leaders committed to implementing the World Bank
reforms agreed in October 2008. Leaders looked
forward to further recommendations, at the next
meetings, on voice and representation reforms on
an accelerated timescale, to be agreed by the 2010
Spring Meetings;
• Leaders agreed that the heads and senior
leadership of the international financial institutions

20

Progress Report on the Actions of the Washington Action Plan
2 April 2009
•

46 The IMF should conduct vigorous and
even-handed surveillance reviews of all
countries, as well as giving greater
attention to their financial sectors and
better integrating the reviews with the
joint IMF/World Bank financial sector
assessment programs. On this basis, the
role of the IMF in providing macrofinancial policy advice would be
strengthened.
47 Advanced economies, the IMF, and
•
other international organizations should
provide capacity-building programs for
emerging market economies and
developing countries on the formulation
and the implementation of new major
•
regulations, consistent with international
standards.

•

should be appointed through an open, transparent,
and merit-based selection process;
Leaders asked the Chairman, working with the G20
Finance Ministers, and building on the current reviews
of the IMF and World Bank, to consult widely in an
inclusive process and report back to the next meeting
with proposals for further reforms to improve the
responsiveness and adaptability of the IFIs.
Leaders committed to candid, even-handed, and
independent IMF surveillance of our economies and
financial sectors, of the impact of our policies on
others, and of risks facing the global economy.

WG3 recommends that the IMF enhances its
capacity building activities for emerging markets
and developing economies in assisting with the
broad adoption of a strengthened financial
regulatory framework.
WG3 recommends that the Fund continues to
strengthen partnerships with donors in delivering
technical assistance.

21