FSF sets out policy directions for strengthening the resilience of the financial system

The FSF’s Working Group on Market and Institutional Resilience has sent an interim report to G7 Finance Ministers and Central Bank Governors. It discusses the Working Group’s views to date on adjustments and near-term challenges in the financial system; the causes of and weaknesses revealed by market turbulence; and broad policy directions for strengthening the resilience of key elements of the financial system.

The proposed policy directions are in six areas:

 - supervisory framework and oversight;

- underpinnings of the originate-to-distribute model;

- the uses and role of credit ratings;

- market transparency;

- supervisory and regulatory responsiveness to risks; and

- authorities’ ability to respond to crises.

The work programmes of international supervisory, regulatory and central bank committees and national authorities to diagnose the causes of the turmoil and to address weaknesses are playing an important role in the Group’s work. The Group will continue to consolidate these diagnoses and develop specific recommendations for its report in April 2008.