On November 15, 2008, the Leaders of the Group of Twenty (G-20) agreed on the Action Plan to Implement Principles for Reform at the Summit on Financial Markets and the World Economy in Washington D.C. in response to serious challenges to the world economy and financial markets. The Action Plan sets forth a comprehensive work plan to implement the five agreed principles for reform: strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, reinforcing international cooperation, and reforming international financial institutions.

The Action Plan sets out immediate and medium-term goals for the agreed principles for reform. With respect to strengthening transparency and accountability, the immediate goals include the following actions: the key global accounting standards bodies should work to enhance guidance for valuation of securities, regulators and accounting standard setters should enhance the required disclosure of complex financial instruments by firms to market participants, the governance of the international accounting standard setting bodies should be further enhanced, accounting standards bodies should ensure the transparency in the disclosure, and the governments should strengthen accountability of regulators; the medium-term goals include the following actions: the cooperation between the key global accounting standards bodies should be strengthened, the key global accounting standards bodies should work intensively toward the objective of creating a single high-quality global standard, and regulators should work to ensure the complete, accurate, and timely disclosure of a financial institution's activities.

With regard to enhancing sound regulation, the immediate goals include the following actions: the IMF, expanded FSF, and other regulators and bodies should strengthen their capacities to make recommendations on and review the operation of financial markets, regulators should take steps to ensure that credit rating agencies meet the standards of the international organization of securities regulators and that they avoid conflicts of interest, regulations over banks' structured credit and securitization activities should be strengthened, the systemic risks of over-the-counter (OTC) transactions and complex derivatives transactions should be reduced, and regulators should ensure that they are able to rapidly respond to market risks; the medium-term goals include the following actions: each country or region pledges to ensure it is compatible with a modern and increasingly globalized financial system, Credit Ratings Agencies that provide public ratings should be registered, the supervision on capital flow should be enhanced, international standards for risk management should be developed, and regulators should ensure that they are able to control financial products and international financial system.

In terms of promoting integrity in financial markets, the immediate goals include the following actions: the national and regional authorities should work together to enhance cooperation and promote information sharing to ensure they are able to address the threats, protect markets and investors against market manipulation and fraud, and strengthen their cross-border cooperation; the medium-term goals include the following actions: the national and regional authorities should strengthen cooperation to fight against illicit financial activities, promote information sharing and make joint efforts to safeguard the stability of international financial system.

Concerning reinforcing international cooperation, the immediate goals include the following actions: the surveillance of cross-border firms should be strengthened, major global banks should meet regularly for comprehensive assessment of the risks they face, and regulators should take all steps necessary to strengthen cross-border crisis management; the medium-term goals include the following actions: the authorities should strengthen the orderly and coordinated cooperation in information collection, regulation and emergency response measures.

On reforming international financial institutions, the immediate goals include the following actions: the FSF should expand to a broader membership of emerging economies, the IMF's role should be enhanced, the international financial regulatory and supervisory mechanism should be checked and integrated, emerging and developing countries' access to credit should be increased, and investment on infrastructure and private businesses should be increased; the medium-term goals include the following actions: the World Bank and the IMF should be comprehensively reformed so that they can more adequately reflect changing economic weights in the world economy and be more responsive to future challenges.

Source: www.fmprc.gov.cn