Communiqué of the ministers and governors of the Group of Ten

The Finance Ministers and Central Bank Governors of the countries of the Group of Ten met in Washington on 16 April 2000. The meeting was chaired by Mr Kaspar Villiger, the Minister of Finance from Switzerland. Ministers and Governors took note of reports from Mr Henk Brouwer, Chairman of the Deputies of the Group of Ten; Mr Mario Draghi, Chairman of WP3 of the OECD and Mr Andrew Crockett, General Manager of the BIS.

Ministers and Governors took note of the favourable developments that had occurred since their last meeting. They agreed that low inflation, improvements in productivity, better risk management, sound financial sector supervision and regulation, and effective macroeconomic management have contributed to strong growth performance in many of the industrial countries. Against this background they discussed systemic risks that could affect the G10 countries. They considered the potential impact of macroeconomic imbalances and their adjustments. Emerging market countries with strong fundamentals are likely to weather large shocks more easily than those that have not yet successfully addressed underlying weaknesses in their economies. Ministers and Governors noted that high priority should be attached to achieving balanced economic growth and to strengthening financial systems. Transparent economic policies are highly desirable in that they help investors to assess macroeconomic prospects and to price risk appropriately.

Ministers and Governors underlined the importance of implementing international codes and standards designed to strengthen financial systems, and encouraged the IMF to move forward in its efforts to monitor the implementation of standards as part of its surveillance process. They welcomed the constructive role that the private sector had played in the resolution of some recent financial crises. They stressed the importance of the international community making operational a broad and flexible framework of principles and tools for involving the private sector in the resolution of crises. This framework would provide a prominent role for the IMF.

Ministers and Governors welcomed ongoing efforts to improve the operation of the market for emerging market debt, including recent steps to promote the wider use of collective action clauses in international sovereign bonds. In January 2000, the United Kingdom included a majority-action clause in its euro-denominated treasury note programme. The clause had no discernible impact on price or liquidity. In February, the German authorities released a document stating that there are no legal impediments to the use of collective action clauses in bonds issued under German law by foreign governments. In April, Canada announced that it would include collective action clauses in its future foreign currency bond and note issues. Ministers and Governors expressed the hope that wider use of collective action clauses would contribute to the more orderly resolution of international financial crises. They also agreed on the importance of continuing dialogue among market participants and other efforts to develop practices that will contribute to more stable global financial markets.

Ministers and Governors took note of the ongoing consolidation process in the financial sector of many industrial countries. The number of bank and non-bank financial institutions is declining, the average size of financial institutions is increasing, and the range of financial services offered by individual institutions is changing. Ministers and Governors welcomed the efforts of a working party on financial sector consolidation, established under their auspices, to understand the trends, causes and policy implications of consolidation in the financial industry. The working party is expected to report to Ministers and Governors by the end of the year.