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Briefing on OECD CMF Meeting, October 2010

This briefing highlights the discussions and outcomes of the OECD Committee on Financial Markets meeting in October 2010, including the first review of Russia, sovereign debt challenges, policy dialogue on financial markets with Southeast Asia, and more.

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Briefing on OECD CMF Meeting, October 2010

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  1. Working Party on Financial Statistics (WPFS): Briefing on the meeting of the OECD Committee on Financial Markets (CMF) 6-7 October 2010 Gert Wehinger Economist Financial Affairs Division OECD Directorate for Financial and Enterprise Affairs (DAF/FIN) 30 November 2010

  2. Highlights • Interesting first review of Russia • Sovereign debt challenges discussed in Financial Roundtable with the private sector and in Tour d’horizon discussion • First Policy Dialogue on Financial Markets with Southeast Asia • Support for work by Working Party on Financial Statistics – but governance? • Work on financial safety net issues and financial group structures • 2011 Programme of Work (POW); 50th anniversary events

  3. Review of Russia • First review of Russia held on 6 October (closed session). • A well-prepared Russian delegation replied openly and comprehensively to the Committee’s questions. • Broad areas where legislative or policy action will be needed were identified, i.a. state ownership, conflicts of interest, the absence of consolidated supervision amid widespread related party transactions, securities supervisor’s lack of independence; limitations on foreign bank access; lack of trust in the rule of law. • Follow-up: Chair’s letter to Russian authorities outlining broad areas where legislative or policy action is needed; CMF Delegates to finalise a list of specific recommendations at April 2011 meeting

  4. Sovereign debt challenges • Discussed with private sector at OECD Financial Roundtable and in regular Tour d’horizon session. Invited WPDM report • Shortcomings in market measures of sovereign risk • Rating agencies in a difficult position, but provide guidance • Sovereign default (debt restructuring) is probable (also: WP) and ways to deal with it need to be considered – broad official backing is essential to minimise fallout (costs of default) • Countries concerned underlined that adjustment measures already taken in response to the sovereign debt crisis seem to be showing positive effects and emphasised that there will be no default

  5. Southeast Asia • First time Policy Dialogue on Financial Markets with Southeast Asia (following up on EE5 PD Oct. 2009), confirming the new proactive CMF outreach strategy (including for EE and along Council guidelines). PD format facilitates two-way dialogue - lessons to be learned for OECD! • Representatives from Singapore, the Philippines, the ASEAN Secretariat and the Asian Development Bank discussed challenges posed by capital inflows addressed by exchange rate flexibility and macro prudential measures; temporary capital control measures may be contemplated. The scope for further regional co-operation to enhance SEA financial markets and regulation was assessed. • Possibilities for further co-operation with the CMF; follow-up co-operation with ASEAN and ADB is planned.

  6. Statistical work • Discussion on joint CMF-WPFS report: CMF acknowledged budget constraints but expressed support for statistical work conducted by WPFS • Asked to specify budget needed and to look into alternatives, e.g. private data providers (currently available: Thomson Reuters Datastream & T1; FT/The Banker; Bureau van Dijk); asked not to duplicate work • Will consult with officials in capitals regarding the viability of the Bank Profitability database and other proposals for data improvements, and whether the governance arrangements for the WPFS should allow for more input from the Statistics Committee (discussed were phasing-in; 2-yr reviews)

  7. Committee on Financial Markets • Participants • High-level staff from finance ministries, central banks of all member countries as well as the • European Commission, including representatives of the • European Central Bank (ECB) • Representatives of international organisations: BIS, EIB, IMF, World Bank • Hong Kong, China (observers) • Russia, Singapore and EE5 countries (ad-hoc observer) Working Party on Financial Statistics Working Party on Debt Management Co-operationwith private sector: OECD Financial Roundtables Co-operationwith other OECD Committees, e.g. Insurance and Private Pensions Committee Co-operationwith other institutions and bodies: e.g.G20, FSB, IOSCO

  8. Core objectives of the CMF

  9. ‘Flagship publication’OECD Journal: Financial Market Trendsalso open for WPFS! • Financial Market Trends provides regular updates of trends and prospects in the international and major domestic financial markets of the OECD area and beyond. It provides timely analysis of and background information on structural issues and developments in financial markets and the financial sector, focusing on areas where changes are most substantial. Topics include financial market regulation, bond markets and public debt management, insurance and private pensions, as well as financial statistics. • Comments and questions should be addressed to the OECD Financial Affairs Division (fmt@oecd.org, permanent url for this page www.oecd.org/daf/fmt). • Purchase a subscription to this journal from the OECD Online Bookshop. • Access to all articles for subscribers to iLibrary. www.oecd.org/daf/fmt

  10. Structural issues • Following up on previous work on financial safety nets, the CMF discussed a report on “Funding systemic crisis resolution”, analysing recent proposals and approaches adopted to finance systemic crisis resolution; • Directed the Secretariat to expand the work and to conduct comparative analyses • CMF discussed financial group structures focusing in particular on the range of incentives and the link between government failure and market failure. • Expressed support to continue work in this areas.

  11. Work Programme • Agreement on planning of 2011 POW along the lines of main three new structural CMF priorities: growth, society/individuals (“better lives”) and ageing. • Agreement to create a new Task Force on Financial Consumer Protection; confirmation of the new PISA 2012 financial literacy option (fully integrated in main PISA project). • Agreement on special events for 50th anniversary (high-level Financial Roundtable, special n° 100 FMT issue in 2011). • Invited candidates for Chairmanship (proposal to be agreed upon by 10 December) • How to follow up with WPFS? Enhance communication & co-operation…

  12. Thank you! Any questions?

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