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G20 members agreed on a four pillar reform agenda including financial infrastructures, capital standards, supervisory issues and resolution systems. However, member states also noted that the standards would be “phased in over a time frame that is consistent with sustained recovery and limits market disruption.”
The G20 reform agenda rests on four pillars:
Regulatory Framework
Towards a new global regime for bank capital and liquidity G20 members support reaching agreement at the time of the Seoul Summit. They agreed that the new standards will be phased in over a timeframe that is consistent with sustained recovery and limits market disruption, with the aim of implementation by end-2012.
“Phase-in arrangements will reflect different national starting points and circumstances, with initial variance around the new standards narrowing over time as countries converge to the new global standard”, the declaration notes.
To strengthen financial market infrastructure the work on measures to improve transparency and regulatory oversight of hedge funds, credit rating agencies and over-the-counter derivatives should be accelerated.
Supervision
G20 called on the FSB to report in October 2010 on recommendations to strengthen oversight and supervision, specifically relating to the mandate, capacity and resourcing of supervisors and specific powers which should be adopted to proactively identify and address risks, including early intervention.
Resolution and addressing systemic institutions
The FSB is called to consider and develop concrete policy recommendations to effectively address problems associated with, and resolve, systemically important financial institutions by the Seoul Summit.
Although it was agreed that the financial sector should make a fair and substantial contribution, member states could not agree on a common policy approach.
Transparent international assessment and peer review
G20 is addressing non-cooperative jurisdictions based on comprehensive, consistent, and transparent assessment with respect to tax havens, the fight against money laundering and terrorist financing and the adherence to prudential standards.