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In a common statement G-20 Member States agreed to "improve their regulatory and supervisory regimes". At their meeting in
Member States will also improve the supervision and governance of financial institutions. In particular “systemically important institutions” - including credit rating agencies – should be properly supervised, they state. “We should ensure that all sectors of the financial industry, as appropriate, are regulated or subjected to oversight.”
Also the issue of pro-cyclicality in financial market regulations and supervisory systems has to be addressed. It was also agreed that financial institutions should have ‘common accounting standards and clear internal incentives’. “These action needs to be taken, through voluntary effort or regulatory action, to avoid compensation schemes which reward excessive short-term returns or risk taking”, Member States agreed. Regulators and supervisors should enhance their vigilance and co-operation with respect to cross-border flows.
Finally, institutions such as the IMF and the World Bank ‘must be comprehensively reformed’, ministers also state. The IMF must enhance its early warning capabilities with due regard to systemically important economies.