The big questions now - for all of us, not just for the euro countries - are, first, and most immediately whether we can avoid new financial shocks; and, secondly, how we should manage the economic fall out from the financial shocks that have already occurred. Developments since the IMF/IBRD meetings in Washington have in my view been quite encouraging. The Japanese financial package is reassuring, and the strengthening of the Yen has brought welcome relief to much of the rest of Asia. United States Congressional approval of the IMF quota increase and of the New Arrangements to Borrow (NAB) has paved the way to a vitally necessary increase in IMF resources. Brazil - which has been widely seen as the next potential emerging market domino - is clearly committed to taking strong corrective domestic policy action, which would command broad international support. And while there evidently has been a sharp contraction of wholesale market lending, within the financial sector in particular, in the United States, and suggestions there of a possible wider credit crunch, no new problems on anything like the scale of LTCM have in fact been uncovered. We are certainly not yet out of the wood, but the financial situation looks rather better than might have been expected two or three weeks ago. If we can avoid a new financial shock - and I am hopeful that we will - we still have to manage the global economic slowdown already underway.
Implementation Has Been Satisfactory But More Needs to be Done Achieving international consensus on the key elements of bank regulatory reforms is laudable. But for the reforms to have their intended effect, implementation is crucial. •  The FSB has formed a Standing Committee on Standards Implementation to monitor the implementation of the financial reforms among its members  •  I chair this Committee and so have particular interest in the issue of implementation. The Basel III standards have generally been implemented in a timely manner. •  Basel III risk-based capital rules have been rolled out in all 24 FSB jurisdictions. •  Final liquidity rules have been issued in all but two jurisdictions. In bank resolution, progress is more mixed. •  On the positive side, regulators have set up crisis management groups and developed recovery plans for all G-SIBs  But significant work remains on operationalising these resolution plans. •  And not all FSB jurisdictions have bank resolution regimes that are in line with FSB’s Key Attributes of Effective Resolution Regimes. Implementing reforms in a timely manner is one thing; implementing them in a consistent manner across jurisdictions is another. Ensuring consistency and level playing fields, and minimising opportunities for regulatory arbitrage have become the focus of implementation monitoring. The Basel Committee conducts in-depth assessments of member implementation of the Basel III capital standards to check for consistency.