The Organisation for Economic Cooperation and Development has established a set of key principles to guide financial policy makers as they look to fundamental reform that will achieve strong, resilient financial systems that play their part in driving economic growth. Among the issues they address are the need for increased transparency, more effective surveillance and greater accountability to the public.
To prevent a recurrence of the crisis, OECD Secretary-General Angel Gurria says that members need to correct a number of failures, including of regulation, supervision, corporate governance and risk management. "This is a major task and to accomplish it, we cannot rely only on incremental, piecemeal reform,” states Gurría. “We must get the whole system right so that the financial sector can effectively resume its vital role in the functioning of the global economy.”
Gurria notes that increasing transparency is key, adding that the complexity and opaqueness of products made risk assessment difficult for firms and investors and hindered market transparency, a major cause of the crisis.
The principles call for domestic and international efforts to ensure that comprehensive, relevant, up-to-date and internationally comparable statistics and indicators are available. It also urges government authorities to obtain legal powers to compel the collection and dissemination of data.
Another item stressed by the framework is the strengthening of the surveillance and analysis of the financial system, involving close cooperation among governments. The framework recommends that market failure analysis should be carried out to assess the efficiency of the system and understand evolving problems.
The principles also underline the need for greater accountability of governments. Government authorities, including regulators, should publish annual reports that give an overview of developments in the financial system, identify key risks and explain how they are addressing them.
The OECD stresses that ongoing review and reform are critical to ensure that governmental authorities stay on top of innovation, develop a comprehensive view, coordinate their actions, and are held to account.