Communiqué

Group of Ten Communiqué

September 21, 1997

1. The Finance Ministers and Central Bank Governors of the countries of the Group of Ten met in Hong Kong on 21st September 1997, under the Chairmanship of Mr. Gerrit Zalm, Finance Minister of the Netherlands. They took note of reports from Mr. Mario Draghi, Chairman of the Deputies of the Group of Ten, Mr. Michel Camdessus, Managing Director of the IMF, Mr. Lawrence Summers, Chairman of Working Party 3 of the OECD, and Mr. Andrew Crockett, General Manager of the BIS.

2. Ministers and Governors welcomed the broad endorsement given to the concerted strategy to promote financial stability in emerging market economies that has been developed in collaboration with representatives of these economies. Given the financial market turmoil in South East Asia, which has many of its roots in weak financial systems, they stressed the importance of concrete and comprehensive implementation of the concerted strategy, which focuses on actions in three main areas: (i) creating a macroeconomic and institutional setting favourable to sound credit cultures and the efficient and continued operation of markets, (ii) promoting effective stakeholder oversight and good governance of financial institutions, and (iii) instituting sound regulatory and supervisory arrangements that support and complement market discipline. In this context they welcomed the finalisation of the Basle core principles of effective banking supervision and stressed the importance of their endorsement and implementation by national authorities. They encouraged their Deputies to continue in their efforts to promote implementation of the concerted strategy in cooperation with representatives of emerging market economies. They welcomed the greater focus of Fund surveillance on the financial sector and the emphasis given to strengthening financial systems by the World Bank. They also noted the importance of effective collaboration among the international institutions on these matters.

3. In considering future work, Ministers and Governors welcomed their Deputies' continued attention to issues pertaining to the stability of the international monetary system and the Deputies' intention to focus on such questions as crisis prevention and crisis management. They also welcomed their Deputies' plan to undertake a focused study on the macroeconomic and financial implications of the ageing of populations in consultation and cooperation with the OECD and others carrying out work on this topic.

4. Ministers and Governors welcomed the progress made to bring capital account liberalisation within the explicit mandate of the IMF, and noted the importance of continued rapid progress towards an amendment of the IMF Articles.

5. Ministers and Governors reviewed the General Arrangements to Borrow and endorsed the proposed renewal of the Arrangements without modification for a further five-year period from 26th December 1998. They also welcomed progress made so far in establishing the New Arrangements to Borrow.

6. The Chancellor of the Exchequer of the United Kingdom, Mr. Gordon Brown, was elected Chairman of the Group of Ten for the coming year.