Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey: Using Information to Curb Financial Risk
September 17, 2007
- Globalization has changed landscape for financial transactions
- Cooperation crucial for increasingly interdependent financial firms
- Book documents challenges, successes of efforts to improve financial supervision
As world markets become more integrated, the international operations of financial firms deepen, increasing their cross-border interdependency and enhancing the need for information flows to enable them and national authorities to monitor prudential risk.
Swiss headquarters of Bank for International Settlements—secretariat for Basel Committee on Banking Supervision (photo: Andre Albrecht/Reuters)
GUIDE FOR POLICYMAKERS
In this environment, law-enforcement agencies are one of many groups of players with a role in identifying arrangements that could facilitate improved international cooperation and information exchange for both prudential purposes and the prevention of financial abuse.
In addition to regulators and supervisors, they include such standard setters as the Basel Committee on Banking Supervision, the Financial Action Task Force, the International Association of Insurance Supervisors, and the International Organization of Securities Commissions; as well as other organizations, including the Egmont Group of financial intelligence units and the Financial Stability Forum.
Conference convenes major players
The IMF has been working indirectly to improve regulatory cooperation through a variety of instruments, including its technical assistance on financial supervision and assessments of compliance with international standards. Its near-universal membership helps it to play a significant role in bringing regulators together for discussion and interaction.
In May 2003, the IMF organized a roundtable on issues facing the offshore financial centers, for which cross-border information sharing is particularly important. One of the main conclusions to come out of the conference was that, although the standard setters have provided extensive guidance and cooperation, and information exchange has improved considerably in recent years, several issues remain to be addressed.
To address those outstanding issues, the IMF organized a conference in 2004 and recently published "Working Together: Improving Regulatory Cooperation and Information Exchange."
This book, which pulls together some of the contributions from the conference, aims to promote continuing discussions on ways to address problems that hamper cooperation and information exchange, some of which relate to inadequate power to gather domestic information, gaps in the requirements placed on financial services businesses in the information they must obtain and hold, excessive political or commercial interests, inadequate domestic cooperation with other agencies in the same jurisdiction, and capacity constraints in low-income countries.