BASSETERRE, St. Kitts – THE intensity of the ongoing global economic crisis has revealed the importance of strengthening commitment to standards of propriety, integrity and transparency in the financial sector; and for the Group of Eight (G-8), the development of the Lecce Framework is to do just that.
The Framework was agreed upon during a meeting of the G-8 finance ministers and central bank governors, held in Lecce, Italy on June 12-13. It is expected to outline a set of common principles and standards regarding the conduct of international business and finance.
The Lecce Framework builds on existing initiatives and lays the foundation for a “stable growth path” over the long term. According to a communiqué issued last week following the G-8 meeting, the new framework is to “identify and fill regulatory gaps and foster the broad international consensus needed for rapid implementation”.
The statement explained that excessive risk-taking has undermined global financial stability and stated the need for the Lecce Framework. The communiqué reports: “For the market economy to generate sustained prosperity, fundamental norms of propriety, integrity and transparency in economic interactions must be respected. The magnitude and reach of the crisis has demonstrated the need for urgent action in this regard. Reform efforts must address these flaws in international economic and financial systems with resolve.”
A wide range of existing and emerging instruments developed by international institutions have already addressed issues relating to propriety, integrity and transparency. In fact, many of the existing frameworks are based on corporate governance, market integrity, financial regulation and supervision, tax cooperation, and transparency of macroeconomic policy and data. However, although there has been much progress at the international level, in many cases, the initiatives suffer from insufficient country participation and/or commitment, according to the communiqué.
Therefore, the framework is to form a coherent basis to bring together similar initiatives done by the International Monetary Fund (IMF), World Bank, Organisation of Economic Co-operation and Development (OECD) and other international organisations to strengthen the global market system.
Although full details of the principles and standards have not yet been finalised, the top priority for the G-8 Leaders is to pursue maximum country participation and swift implementation. The Lecce Framework is expected to, in the short-term, reach out to broader fora, including the G-20 and beyond.
