Communiqué of the Ministers and Governors of the Group of Ten

Washington D.C., 29 April 2001

The Finance Ministers and Central Bank Governors of the countries of the Group of Ten met in Washington D.C. on 29 April 2001. The meeting was chaired by Mr. Hans Eichel, the Minister of Finance of Germany and current Chairman of the Group of Ten. 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 exchanged views on the implications of consolidation in the financial sector. They noted that as a result of the noticeable acceleration in consolidation activity in the last few years, a number of large, and in some cases increasingly complex, financial institutions have been created. Existing policies appear adequate to contain individual firm and systemic risks now and in the intermediate term. However, consolidation may increase the challenges that could arise if a large and complex financial organisation encountered serious financial difficulties. These challenges are heightened by the fact that insolvency arrangements differ markedly across countries. For these reasons, Ministers and Governors stressed the need for ongoing, close co-operation and communication among the competent authorities, both cross-sector and cross-border. They also underscored the need to evaluate steps that could be taken to improve legal and institutional arrangements in order to make the global financial system more robust and efficient.

Ministers and Governors discussed structural issues relating to asset price movements and their implications for global financial stability. They underlined the need for a better understanding of the fundamental factors driving asset prices. They noted the role of information, expectations and market dynamics in influencing asset prices and they underscored the importance of transparency and the provision of timely, relevant and accurate information for facilitating the proper assessment of risk and the determination of asset values. Ministers and Governors encouraged efforts in all fora that seek to make the financial sector more resilient to movements in asset prices through the pursuit of sound macroeconomic policies and the adoption of coherent structural policies. In particular, they considered it useful to evaluate the effects of structural policies on asset price determination.