World

G20 Interview: Planning New Global Financial Regulatory Frameworks

An interview with Rupert Thorne, Deputy to the Secretary General of the Financial Stability Board.

Editor's note: In the video to the right: Footage of activists in Pittsburgh organizing against the G20 Summit, including labor, fair trade, living wage, community and socialistorganizers. The 2009 G20 Summit in Pittsburgh will be held September 24th and 25th attended by leaders from the most powerful countries. This footage was filmed on September 23rd, 2009. Filmed and edited by Jeb Sprague, for theInter Press Service (IPS).

Pittsburgh -- At the upcoming G20 Summit in Pittsburgh, Pennsylvania, plans for new global financial regulations will be presented by the chairman of the Financial Stability Board (FSB), Jonathan Adair Turner, Baron Turner of Ecchinswell, a British business man. The report will be made public and is said to provide an analysis of the progress made in implementing the G20 London Summit recommendations for strengthening financial stability and the further steps that the FSB says are needed to improve financial regulation going forward. With the recent global financial crisis, organizations such as the FSB are seen as key by business and governments leaders for developing transnational frameworks to stabilize global capitalism.

The FSB facilitates communication and planning between finance and central bank officials of the G20 governments, along with officials of organizations such as the Bank for International Settlement, the European Central Bank, the European Commission, the International Monetary Fund, the Organization for Economic Coordination and Development (OECD), the World Bank, and half a dozen global standard-setting forums. The officials working together are grouped into a Steering Committee and three Standing Committees -- for Vulnerabilities Assessment; Supervisory and Regulatory Cooperation; and Standards Implementation. Jeb Sprague had the following discussion with Rupert Thorne, Deputy to the Secretary General of the FSB.

JS: How often does the FSB meet? Are FSB meetings only held when the finance ministers of the participant countries are together in one room, or does the FSB have more informal meetings?

TR: The Plenary of the FSB meets at least twice a year. The Standing Committees and working groups meet more often. Meetings can be in person or via video- or tele-conference. The meeting in London on 4-5 September 2009 was a meeting of G20 Ministers and Governors and was not related to the FSB. Meetings of the FSB take place at the level of senior representatives of member authorities (e.g. deputy governors of central banks, heads of regulatory and supervisory agencies and senior officials in ministries of finance), rather than at the level of Ministers of Finance.

JS:Can you provide more information on the different Standing Committees and working groups that the FSB facilitates? How many of these exist and what are the different areas they focus on? Are they split into regional groups/committees or are they split up by areas pertinent to the different types of representatives?

TR: Our press release after our inaugural meeting in July describes our current Standing Committees and Working Groups and their areas of focus. Since our aim is to promote global coordination by the different types of institution that are our members, all of the committees and working groups have a mixture of regions and types of institution among their membership.

JS: How has the FSB been changed since it was established as the successor of the Financial Stability Forum (FSF)?

TR: The FSF was re-launched as the FSB at the April 2009 Summit of G20 Leaders with a broadened mandate and an expanded membership. Its institutional structure was also strengthened. See the press release in April 2009 announcing the establishment of the FSB and the press release from the 1st FSB Plenary in June 2009. The main change since then is an increase in the range of issues and the momentum of the work that the FSB is engaged in.

JS:Are FSB reports just recommendations? How can the FSB be sure that its recommendations are enacted?

TR: The FSB's national members are responsible for implementation within their home jurisdictions, so when the FSB reaches a consensus for action on a given issue this means its members have committed to carry it out. The FSB is monitoring members' progress in implementation and will be carrying out assessments of the consistency in implementation of policies across jurisdictions and sectors.

JS: What sort of data does the FSB look at when monitoring member compliance?

TR: Over the coming months, the FSB will develop more fully its framework for monitoring compliance. For assessing compliance with key international standards, an important element will be the Reports on the Observance of Standards and Codes performed by the IMF and World Bank, and the FSB will also use other information available as appropriate. As with the IMF and World Bank reports, monitoring compliance will involve not simply looking at the laws and regulations that have been enacted by members, but how they are implementing them in practice.

JS: How is the FSB connected to the Basel committee and the Bank for International Settlements (BIS)? How do these cooperate?

TR: The Basel Committee is one of the international organisations that is a member of the FSB, and so they fully participate in the FSB's work. Since they are in the same building as ourselves, this helps us coordinate. The FSB Secretariat is located in Basel, Switzerland and hosted by the BIS. The BIS is also one of the member organizations of the FSB. The costs of the FSB are borne by member jurisdictions and organizations. Each member separately pays its own direct expenses arising from the FSB. The Secretariat's operating budget is part of the BIS's budget, and the BIS's 2009 Annual Report can be found here.

JS:How large is the FSB's permanent staff and how is the chair of the FSB decided upon?

TR: The FSB Chair is appointed by the Plenary from amongst its members. The Secretariat supporting the work of the FSB is approximately fifteen people. The staff members are from a wide range of countries. We have a range of disciplines reflecting the different areas in which the FSB is involved -- not only economics but also accountancy and regulation, for instance. A few of the staff joined us from the BIS but most come from other member institutions. The Secretariat's size has inevitably expanded somewhat as we have transitioned from the FSF to the FSB - previously we were in single figures, but we would still only just about fill up a soccer team.

Read more of Jeb Sprague's work at Inter Press Service.