International cooperation

To strengthen international cooperation we have agreed:

• to establish the remaining supervisory colleges for significant cross-border firms by June 2009, building on the 28 already in place;
• to implement the FSF principles for cross-border crisis management immediately, and that home authorities of each major international financial institution should ensure that the group of authorities with a common interest in that financial institution meet at least annually;
• to support continued efforts by the IMF, FSB, World Bank, and BCBS to develop an international framework for cross-border bank resolution arrangements;
• the importance of further work and international cooperation on the subject of exit strategies;
• that the IMF and FSB should together launch an Early Warning Exercise at the 2009 Spring Meetings.

Prudential regulation

We have agreed to strengthen international frameworks for prudential regulation:

• until recovery is assured the international standard for the minimum level of capital should remained unchanged;
• where appropriate, capital buffers above the required minima should be allowed to decline to facilitate lending in deteriorating economic conditions;
• once recovery is assured, prudential regulatory standards should be strengthened. Buffers above regulatory minima should be increased and the quality of capital should be enhanced. Guidelines for harmonisation of the definition of capital should be produced by end 2009. The BCBS should review minimum levels of capital and develop recommendations in 2010;
• the FSB, BCBS, and CGFS, working with accounting standard setters, should take forward, with a deadline of end 2009, implementation of the recommendations published today to mitigate procyclicality, including a requirement for banks to build buffers of resources in good times that they can draw down when conditions deteriorate;
• risk-based capital requirements should be supplemented with a simple, transparent, non-risk based measure which is internationally comparable, properly takes into account off-balance sheet exposures, and can help contain the build-up of leverage in the banking system;
• the BCBS and authorities should take forward work on improving incentives for risk management of securitisation, including considering due diligence and quantitative retention requirements, by 2010;
• all G20 countries should progressively adopt the Basel II capital framework; and
• the BCBS and national authorities should develop and agree by 2010 a global framework for promoting stronger liquidity buffers at financial institutions, including cross-border institutions.