A global regulatory body has agreed a broad plan to tighten supervision of big financial institutions blamed for triggering the 2008-9 economic crisis, a senior South Korean official said Thursday. The Financial Stability Board has agreed on "broad directions" for regulating so-called systematically important financial institutions (SIFI), Financial Services Commission chairman Chin Dong-Soo told a briefing.
Chin said FSB members had made an informal agreement and "conclusions will be reached" when the body holds a full meeting in Seoul next Wednesday. The FSB, which was created last year by the Group of 20, will report its recommendations to a G20 summit in Seoul on November 11-12, Chin said.
He said the summit will "be remembered as a breakthrough event to lay out a new global financial order... including Basel III." Top central bankers meeting in Switzerland in September agreed a set of new bank regulations, called Basel III, aimed at preventing a repeat of the financial crisis.
The Basel Committee on Banking Supervision will meet in Seoul next Tuesday. Nations have been torn over how to tighten regulation of banks and other big financial firms blamed for causing the financial rout. Emerging economies have argued their fledgling financial institutions are not culpable in the recent crisis and cannot afford new restrictions, while advanced countries have advocated the plan more strongly.
Chin said FSB members were discussing how to define global SIFIs, which would face stricter rules than smaller firms with less global influence. They will also discuss expanding communications between regulators in countries where big companies are headquartered and other nations where they have branches, he said.
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