Capital Briefs: Global Coordination Urged in Bank Regulation

Regulators around the globe must coordinate their supervision of the world's 100 largest financial firms, said Charles Dallara, managing director of the Institute of International Finance.

"The regulatory system for certain firms will need to evolve from today's largely national basis with diverse supervisors responsible for various segments of the financial industry, to a system that better reflects the globalization of risk management in today's leading financial institutions," he said at a press conference Thursday.

Mr. Dallara said organizations such as the Basel Committee on Banking Supervision could pool information on credit, interest, and market risk from all financial industry sectors. More information, he said, must be shared with home-country supervisors about companies' international operations. Finally, the public disclosures required of financial firms must be expanded, he said.

The report did not address whether conglomerates' nonfinancial operations should be included in this new system.

"The type of information-sharing agreements we are talking about would not be relevant to the commercial operations in a conglomerate," noted Barbara Matthews, Institute of International Finance regulatory counsel.

- Barbara A. Rehm and Bill McConnell

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