Report of the Task Force on International Financial Reform

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Press conference: Mid Year Economic and Fiscal Outlook, tax reform
December 17, 1998
Tax Reform Legislative Unit
January 18, 1999

Report of the Task Force on International Financial Reform



Report of the Task Force on International Financial Reform

The Prime Minister’s Task Force on International Financial

Reform (comprising private and public sector members chaired by the Treasurer) has

completed its report and presented it to the Prime Minister.

In keeping with the Prime Minister’s request, it has made a number

of constructive and practical suggestions on how Australia can contribute to strengthening

the international financial system and achieving greater stability in global capital


The Task Force comprised several of the most senior representatives

from the Australian banking and financial sector along with the heads of a number of

Government Departments and the Governor of the Reserve Bank. Successful reform of the

international financial system will require the involvement of the private sector.

The Task Force identified a number of key principles and elements for

reforming the international financial system so as to produce greater stability in capital

flows, minimise the risk of future financial crises and provide a more effective mechanism

for managing them when they occur. It noted, however, that there is no single measure to

achieve these objectives. Reform will require progress across a wide range of fronts with

much of it focused on achieving sound policies at the national level.

Importantly, the Task Force observed that Australia is well placed to

make a significant contribution to efforts to reform the international financial system.

The Australian economy and financial system is in a very sound position and we have a

great deal of experience we can offer emerging markets.

Some of the specific proposals identified by the Task Force include:

  • Supporting the establishment of a working group, as called for by APEC Leaders, to

    examine appropriate disclosure standards for highly leveraged hedge funds and outlining

    some of the issues that the group would need to consider.

  • Playing an active role in the establishment of a working group on improved crisis

    management, as also recently called for by APEC Leaders, by identifying some of the key

    issues that will need to be considered if the use of collective action clauses and

    improved arrangements for creditor-debtor consultations are to be accepted by private

    sector lenders and become standard for sovereign borrowers. The Task Force Report

    highlights some of the issues an international working group on this issue will have to

    address along with emphasising that extensive consultations with private sector leaders

    will be required.

  • Proposing that countries prepare, and publish, a report on the extent to which they meet

    recognised disclosure standards. The Task Force noted that Australia could take the lead

    in the preparation of a ‘Transparency Report’, which would provide a format for

    other countries to follow.

  • Working actively in regional economic forums, such as APEC, the Executive Meeting of

    East-Asian Pacific Central Banks and the Manila Framework Group, to advance reform

    initiatives and cooperation on financial policy issues. The Task Force noted that

    Australia’s hosting of the Manila Framework Group meeting in the first half of 1999

    provided an opportunity to advance some of the reform proposals, such as the concept of

    countries producing Transparency Reports.

  • Offering to act as a regional coordinator for submissions to a Basle Committee on

    Banking Supervision review of capital standards. The Task Force noted the need to review

    these standards on an ongoing basis to ensure they remain commensurate with the demands of

    an increasingly integrated, complex and evolving financial system.

  • Advancing the concept of peer reviews of a country’s prudential supervisory

    arrangements through the establishment of a new international secretariat, perhaps jointly

    sponsored by the IMF and World Bank and other international organisations, to coordinate

    such reviews and provide the necessary expertise.

  • Building on the important role Australia is playing in providing technical assistance to

    the economies in the region that are seeking to improve their economic governance by

    increasing the cooperation between the Government, Australian financial institutions and

    private sector organisations in the provision of such assistance.

  • Promoting the need for the international community to better coordinate the provision of

    technical assistance to the emerging markets. The Task Force noted that the World Bank, in

    consultation with the other international financial institutions, should take the lead in

    improving the coordination of such assistance.

  • Encouraging international efforts to increase trade finance for the crisis economies and

    providing technical assistance to facilitate bank and corporate restructuring.

  • Proposing and actively encouraging that the United Nations Commission on International

    Trade Law undertake the development of an international model law on insolvency and

    participate in monitoring implementation.

  • Providing technical assistance to regional economies on developing and managing a

    sovereign bond market and proposing that an appropriate working group consult on issues

    relating to debt management in emerging economies.

  • Proposing that consideration be given to ensuring how greater transparency with respect

    to foreign investment laws and policies can increase a country’s attractiveness to

    foreign direct investment.

  • Supporting efforts by the World Bank and IMF to achieve closer collaboration and

    introduce more innovative and flexible financial support packages.

  • Proposing that a Financial Sector Policy Forum by convened, perhaps jointly sponsored by

    the IMF, the World Bank and other international institutions, to enhance international

    cooperation and provide a standing mechanism to respond to future international financial

    policy issues.

As outlined above, the Task Force has presented a wide range of suggestions as to how

Australia can contribute to international financial reform. The Government will be

actively pursuing many of these suggestions with its regional neighbours and in various

international forums.


21 December 1998

Contact: M.J. Callaghan

Department of Treasury

02 6263 3754