Support for Finance Minister Paul Martin's timely call for a global financial services watchdog is beginning to blossom. Last weekend's meeting of finance ministers from Asia-Pacific Economic Co-operation forum countries endorsed his proposal, formally introduced to less than enthusiastic reviews in April.

This comes on the heels of the G8 meeting -- the G7 leading industrialized countries plus Russia -- in Birmingham earlier this month, where the leaders spoke of the need for multilateral surveillance of financial institutions and regulatory systems. The backing by APEC ministers, who represent several countries grappling with crippling currency and banking crises, as well as by G8 leaders, should help ensure the minister's solid suggestion becomes a reality.

Martin's proposal is to establish a new international secretariat that would survey financial supervisory and regulatory systems and identify financial-sector problems before they mushroom into crises. This body would provide a mechanism for peer review of these systems, with participation by experts from member countries. A summary of the review would be published and would give investors another source of information on which to base investment decisions.

Part of the reason for the lukewarm reception first given the proposal was that some nations were unconvinced of the need for such a body.

But as APEC leaders noted: "The recent instability in Asia underscores the importance of developing strong, resilient and well-regulated financial markets in the framework of a stable international financial system." And that means studying options for better co-ordination or enhanced forms of collaboration between financial institutions and the international regulatory community. The ministers rightly added that: "Any reform should strengthen or complement rather than duplicate existing global or regional arrangements."

The International Monetary Fund and the World Bank are to report by next fall on how to make the system work. This is a piece of preventative maintenance that the hardware and software of global financial systems could well use.

	This Information System is provided by the University of Toronto Library and the G7 Research Group at the University of Toronto.
	Please send comments to: g8@utoronto.ca Revised: August 17, 1998.

All contents copyright, 1998 University of Toronto unless otherwise stated. All rights reserved.