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13 March 2009

FSF discussions on financial crises

The FSF discussed reports on procyclicality, sound compensation practices and cross-border crisis management. Reports on each of the topics will be published in the coming weeks. The FSF also decided to broaden its membership.

The FSF met in London and discussed reports from ongoing workstreams on procyclicality, sound compensation practices, cross-border crisis management, and progress in implementation of the FSF April 2008 recommendations. Reports on each of the topics will be published in the coming weeks.


In particular, the FSF endorsed:


Ø       recommendations to mitigate procyclicality in the financial system addressed to national authorities and prudential and accounting standards setters. This comprises a framework for evaluating policy options as well as recommendations in three priority areas: the bank capital framework, loan loss provisioning practices and standards, and the interaction between leverage and valuation.


Ø       a set of principles that will reinforce sound compensation practices in the financial industry. The principles aim to ensure effective governance of compensation, alignment of compensation with prudent risk taking, and effective supervisory oversight and stakeholder engagement in compensation.


Ø       a set of high level principles for cross-border co-operation on crisis management. These principles cover preparatory work in normal times, and appropriate sharing of information and co-operation in crisis times.


The FSF also decided to broaden its membership. The new Financial Stability Forum members 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 FSF members.


The current FSF comprises national financial authorities from the G7 countries, Australia, Hong Kong, Netherlands, Singapore and Switzerland, as well as international financial institutions, international regulatory and supervisory groupings, committees of central bank experts and the European Central Bank.


Press release

Press release on new members


© FSF - Financial Services Forum

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