Publishes key principles for a sustainable economic system

The OECD 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.

Among the issues they address are the need for increased transparency, more effective surveillance and greater accountability to the public.

Welcoming the agreement of member countries on the principles, OECD Secretary-General Angel Gurría underlined the importance of reform: “The systemic importance of the financial system was clearly demonstrated by the huge human and social impact of the crisis. “

“To prevent its recurrence, we 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” said Guría.

“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,” he added.

Increasing transparency is key, he continued. “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. Governmental authorities should have the legal powers to compel the collection and dissemination of data.”

“Surveillance and analysis of the financial system should be strengthened, involving close cooperation among governments. 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. 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, said the proposals.

Download the policy document from the link below: