Communiqué

Washington, D.C.

1. The Ministers and Central Bank Governors of the countries of the Group of Ten met in Washington on 28th April, 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 III of the OECD and Mr. Andrew Crockett, General Manager of the BIS.

2. The Ministers and Governors welcomed the report on the promotion of financial stability in emerging market economies prepared by a working party consisting of representatives of the G-10 and emerging market economies. They endorsed the recommendations in the report for a concerted international strategy to strengthen financial systems. In addition to the conduct of sound macroeconomic policies, the strategy calls for the development of an international consensus on the key elements of sound financial systems; the formulation of sound principles and practices in crucial areas such as bank supervision and securities market oversight by international groupings of national experts; the use of market channels to provide incentives for the adoption of sound supervisory systems, good corporate governance and other key elements of a robust financial system; and the provision of advice and support by the multilateral institutions for the adoption and implementation of the sound principles and practices that have been developed.

3. The Ministers and Governors stressed the importance of the consultative process used to develop the strategy, and the desirability of wider endorsement of the strategy by the international community. They welcomed the delineation of roles and responsibilities set out in the report. They welcomed the joint statement by the Managing Director of the IMF and the President of the World Bank on their cooperation in this area. They welcomed the formulation of core principles for effective banking supervision through a consultative process under the auspices of the Basle Committee on Banking Supervision, and encouraged further efforts to develop sound principles and practices. They encouraged their Deputies, in co-operation with representatives of emerging market economies, to follow closely the development and implementation of the strategy.

4. The Ministers and Governors received and approved a report exploring the policy implications of the growing use of electronic money in the areas of consumer protection, law enforcement and supervision. They noted that electronic money was still in the early stages of development, but that electronic money schemes could bring important benefits. In the further development of electronic money, consumers, providers and authorities may wish to give attention to the areas of transparency, financial integrity, technical security and vulnerability to criminal activity. Ministers and Governors welcomed the efforts of existing bodies considering the implications of electronic money. They agreed that it had been useful to bring together the perspectives of central banks, finance ministers and law enforcement authorities and that a similar approach could be useful in the future if circumstances warrant. They saw no need at this time to establish new formal international coordinating mechanisms specifically addressing electronic money developments.

5. The Ministers and Governors welcomed the recent discussions of capital account liberalization by the IMF Executive Board and the G-10 Deputies. They affirmed that the liberalization of capital account transactions offers substantial economic benefits and should be supported by overall economic and structural policies fostering macroeconomic equilibrium and financial sector strength. They agreed that the IMF should have an important role in promoting capital account liberalization and primary responsibility among the international institutions for matters related to the balance of payments. They are of the view that the Articles of the Fund should be amended to reflect this and look forward to early progress on this issue.