IMF Paper on the 2017 Joint Review of Standards and Codes Initiative
IMF published a joint policy paper (IMF-World Bank) on the 2017 review of the standards and codes (S&C) initiative. The paper assesses the progress in implementing recommendations of the 2011 review and offers recommendations for implementing further improvements. The Directors agreed that the initiative continues to make a substantial contribution to promoting international financial stability and there are no major gaps in its overall architecture. However, the recent surveys in some individual policy areas reaffirm that there is scope to better adapt the initiative to the policy needs of member countries and to guide capacity development efforts and support IMF surveillance and World Bank operational work.
The review recommends proceeding with updates to the IMF's monetary and financial policy transparency code and data policy area; endorsing the Key Attributes of Effective Resolution Regimes for Financial Institutions as applied to the banking sector and the banking sector assessment methodology; and considering new areas for IMF-World Bank involvement as they arise. The new data quality assessment will seek to adopt the best practices identified in this review and would be tested through pilot exercises. Islamic banking is another area for potential consideration for the initiative. Staff plans to prepare a Board paper by April 2018 on S&C work related to Islamic banking. The paper is expected to ask for formal endorsement of the "Core Principles for Islamic Finance Regulation for Banking," prepared by the IFSB, as a standard under the IMF/World Bank S&C initiative. The review also calls for increased engagement with member countries and continued collaboration across policy areas.
Overall, many financial standards and codes have undergone far-reaching revisions, building on work ongoing at the time of the last review. Collaboration with the financial supervisory standard-setting bodies has helped formalize the flexible approach to S&C work in Financial Sector Assessment Programs (FSAPs). In November 2016 and June 2017, the IMF Board was updated on the understanding reached between staff at the IMF and the financial supervisory standard-setting bodies on the continued approach to the use of financial sector supervisory standards for graded assessments and focused reviews. The latter is now being informed by sets of “base principles” that will serve as the starting point for discussions between staff and the authorities about the scope of focused reviews. The IMF's 2019 FSAP review will provide an opportunity to take stock of the experience with this approach.
The S&C initiative comprises twelve policy areas covering transparency of data and policy making; financial sector regulation and supervision; and institutional and market infrastructure. S&C outputs for member countries are prepared and published at the request of the member country and include Detailed Assessment Reports, Reports on the Observance of Standards and Codes (ROSCs), Technical Notes, and newer outputs such as Fiscal Transparency Evaluations.
Related Link: Policy Paper (PDF)
Keywords: International, Banking, Insurance, Securities, Accounting, Standard and Codes Initiative, World Bank, IMF
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