It is the one Forum in which regulators come together with finance ministries, central banks and the international financial institutions, specifically to look at financial stability issues, and how they should be resolved. In its first four years, the FSF has made some progress. Its work on Offshore Centres certainly led to improvements in regulatory standards in a number of those centres. And it has stimulated both the securities and insurance regulators to work more quickly, and in a more determined way than was previously the case. I have first hand knowledge of that impact. But more could be done. It remains difficult and slow to agree priorities between the Forum’s membership. I also think it could usefully take a somewhat broader view of its responsibilities. The Forum could do more to co-ordinate the activities of the sectoral international regulators and to contribute to their priority-setting. It could use its privileged links with the G7 finance ministers to bring more political impetus to the work of the bodies represented on it. IOSCO and IAIS, for example, have no other structural links to ministers, or to central bankers. The Forum is well placed to identify weaknesses in regulation, whether in member states or internationally. This would not involve duplication of effort, as some fear, rather the addition of urgency and focus to work already under way.
A new agenda for change So while the architecture may remain fundamentally the same, the plumbing of the financial system has undoubtedly been improved. This is unromantic work, but when crisis hits in the middle of the night, and unpleasant odours emerge from the system, it is the plumber you call, not the architect. However, it is reasonable to ask whether these changes are sufficient to reduce the incidence of financial crises in the future and to enhance our ability to manage such crises as will, inevitably, occur. I do not propose today to try to cover all the issues that might be raised by that general question. I certainly do not plan to talk about fiscal and monetary policies, which are no longer my area of expertise. I will also leave to one side the important developments of bankruptcy and insolvency procedures. The IMF’s Sovereign Debt Restructuring Mechanism (SDRM) proposal seems to have been shelved for the time being but, judging from recent successful bond issues by Mexico and Brazil, some solid progress is clearly being made on collective action clauses which should allow for more timely and orderly restructuring of sovereign debt in case of problems. However, all of these subjects are, as we say, above my pay grade. I will concentrate instead on the regulatory dimension. I do not propose a very radical agenda. Regulators are not normally revolutionaries.