IFI governance


Financial Stability Forum agreed

15 March 1999

The G7 will establish a Financial Stability Forum (FSF) to improve the monitoring and regulation of financial markets. G7 countries will be represented by 3 members each with the remaining 14 members coming from the World Bank, IMF, BIS and OECD and other international and national regulators.

The forum will meet twice a year and will first meet at this year’s WBIMF Spring Meeting. The FSF is the realisation of the Standing Committee on Financial Regulation proposed by UK Chancellor, Gordon Brown.

The failure to include developing countries, particularly the middle-income countries, suggests that the benefits of the forum will be limited, precisely because it is these countries which have poorer regulatory standards and institutions, and are more likely to suffer from financial crises. Also, it is hard to see how a committee which meets only twice a year will be able to properly monitor national regulatory and supervision processes or to alert the international financial community to impending crisis.

The UK government admitted that more countries should be included in the FSF but argued that its aims are right.