Subsequent to its meeting in Washington on 14 April, the Financial Stability Forum has issued terms of reference for and appointed chairmen of three ad hoc working groups:
- a group chaired by Mr Howard Davies, Chairman of the UK Financial Services Authority, has been asked to recommend actions to reduce the destabilising potential of institutions employing a high degree of leverage (HLIs) in the financial markets of developed and developing economies;
- a group chaired by Mr Mario Draghi, Director General of the Italian Treasury, has been asked to evaluate measures in borrower and creditor countries that could reduce the volatility of capital flows and the risks to financial systems of excessive short-term external indebtedness;
- a group chaired by Mr John Palmer, Superintendent of Financial Institutions, Canada, has been asked to evaluate the impact on global financial stability of the uses made by market participants of financial offshore centres, and the progress made by such centres in enforcing international prudential standards and in complying with cross-border information exchange agreements.
The working groups comprise officials of developed and developing market economies, international financial institutions and supervisory groupings, and will draw on work completed or under way in various public and private sector forums. They will report on their work to the Forum’s next meeting in September.
The Financial Stability Forum was initiated by the G7 Ministers and Governors in February this year, based on a recommendation by Mr Hans Tietmeyer, President of the Deutsche Bundesbank. The Forum is chaired by Mr Andrew Crockett, General Manager, Bank for International Settlements.