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G20 Meetings > 1999 Documents

International Codes and Standards
(Backgrounder)

Finance Ministers and Central Bank Governors Meeting
Berlin, Germany, December 15 & 16, 1999

See Annex: Major International Standards Listed by Sector and Responsible Organizations

Why Are International Codes and Standards Important?

Efficient economies rely on complete and reliable information, open and transparent government policies, and a sound regulatory framework. Weaknesses in these areas have caused investors in some emerging markets to make decisions on the basis of inadequate information. And when surprised, markets tend to panic – a phenomenon that contributed to the severity of the emerging market financial crisis. Implementation of standards and codes can help reduce the susceptibility of the international financial system to financial instability.

The International Monetary Fund (IMF) and other bodies have developed a number of codes and standards that set out "good practices" in the areas of policy transparency, data dissemination, and financial regulation and supervision. Attached is a list of the major international codes and standards.

What Is Being Done?

• A great deal of progress has been made in establishing international standards in a number of areas: data dissemination; fiscal, monetary and financial policy transparency; banking regulation and supervision; securities and insurance regulation; accounting, auditing and bankruptcy; and corporate governance. For example, the IMF has developed standards or codes for fiscal and monetary policy and economic and financial data. These include the Special Data Dissemination Standard established in March 1996 and expanded in April 1999, the Code of Good Practices on Transparency in Monetary and Financial Policies, and the Code of Good Practices on Fiscal Transparency.

• The Basle Committee on Banking and Supervision has issued many principles for the banking industry, including the Basle Capital Accord, the Core Principles for Effective Banking Supervision, Sound Practices for Banks’ Interactions with Highly Leveraged Institutions, The Supervision of Cross-Border Banking, etc.

• The International Organization of Securities Commissions has issued standards for the securities industry, including a Supervisory Framework for Markets, and Objectives and Principles of Securities Regulation. For the insurance industry, the International Association of Insurance Supervisors has produced several principles, including the Insurance Supervisory Principles (Core Principles).

The most important priority for the international community, however, is to encourage and endorse the activities underway in a variety of fora to disseminate and implement these standards, especially in emerging markets. Some of the steps taken so far include:

• the establishment by the Financial Stability Forum (FSF) of a Task Force on Implementation of Standards in October 1999;

• the compilation by the FSF of a draft Compendium of Standards, which provides a common reference for the various guidelines, principles and codes of good practice that are internationally accepted as relevant to stable and efficient financial systems. Essentially, this will keep track of all of the standards that are being developed; and

• the preparation by the IMF of Reports on Observance of Standards and Codes (ROSCs). These reports summarize an individual country’s compliance with a wide range of international codes and standards. They also suggest priorities for future implementation. Among G20 countries, Argentina, Australia and the United Kingdom have already undergone ROSCs.

A Role for the G20

The role of the international community in assessing the implementation of international codes and standards will be a major element on the agenda of the inaugural meeting of G-20 finance ministers and central bank governors in Berlin.

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Annex: Major International Standards Listed by Sector and Responsible Organizations

Public Sector – International Monetary Fund

Code of Good Practices on Transparency in Monetary and Financial Policies.
Code of Good Practices on Fiscal Transparency.
General Data Dissemination System.
Special Data Dissemination Standard.