NO.035

Australia has been invited to join the Financial Stability Forum. This follows the

announcement by the G7 Heads of Government at their recent economic summit that the

Financial Stability Forum should be broadened to include significant financial centres.

The Financial Stability Forum was initiated by the G7 countries earlier this year as

part of their response to strengthening the international financial system. Its focus is

to promote information exchange and co-ordination on financial issues among national

authorities, international institutions and international financial regulatory bodies.

The initial participants in the Forum involved the finance ministries, central banks

and lead regulators of each of the G7 countries, together with the chairs of the

international regulatory organisations, and representatives of the international financial

institutions. Following the recent decision by G7 Leaders to broaden the Forum to include

four additional significant financial centres, Australia, Hong Kong SAR, Singapore and the

Netherlands have been invited to participate.

I welcome Australia’s inclusion in the Financial Stability Forum. It is a recognition

of the significant contribution Australia has made to international financial reform

issues since the onset of the Asian financial crisis. It also reaffirms Australia’s

growing importance as a centre for global financial services.

• In December 1998, I presented to the Prime Minister the report of the Task Force on

  International Financial Reform. This report has received considerable international

  support.

• Australia has played a high-profile role in advancing international financial reform

  issues, including in the G22, the Manila Framework Group, the Interim Committee of the

  International Monetary Fund, and in APEC. We have also made an important contribution in

  providing training in financial sector regulatory issues to the economies in our region.

Issues currently being addressed by the Financial Stability Forum include the

activities of highly leveraged institutions (including hedge funds), measures to reduce

the volatility of capital flows and the risk of short-term external indebtedness, and the

impact on financial stability of off-shore financial centres.

CANBERRA

22 June 1999