G7 likely to keep closer eye on banks

Conferences

The Group of Seven economic powers are likely to deploy an international team to keep closer tabs on the world's big banks while demanding better risk management and information disclosure across financial markets.

The move, due to be announced at G7 talks on Friday, is in response to a global markets crisis which could cost close to $1 trillion in losses and downgrades in the value of toxic assets accrued over years of investor euphoria.

Finance ministers and central bankers of the G7 nations meet in Washington tomorrow to plot their next move in response to the crisis, based on a list of recommendations from the Financial Stability Forum, a body they created.

Among the key FSF ideas, elements of which were published in the Wall Street Journal and confirmed to Reuters by a G7 source yesterday, is the creation by the end of this year of a team of supervisors to watch over the biggest international banks.

As news of the action plan emerged, so did news that German regulators had ordered the closure of a small bank which blamed its downfall on the credit crunch. This hit in August as a defaults crisis in the US mortgage market snowballed.

“If implemented, the plan should minimize the possibility that the challenges we've faced will reoccur,” David McCormick, US Undersecretary of the Treasury for International Affairs, said, according to the Wall Street Journal. (China Daily)

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