G20 leaders vow to strengthen int'l financial regulatory system

PITTSBURGH, the United States, Sept. 25 (Xinhua) -- The Group of 20 (G20) leaders agreed Friday here to strengthen international financial regulatory system to avoid future crisis.

Chinese President Hu Jintao (R5 Front) poses for photos with other participants during the Group of 20 (G20) Financial Summit in  Pittsburgh of the U.S., Sept. 25, 2009. (Xinhua Photo)

In the Leaders' Statement released after the summit, the G20 leaders reaffirmed that one of the major roots of the current financial crisis lies in the lack of regulation.

"Major failures of regulation and supervision, plus reckless and irresponsible risk taking by banks and other financial institutions, created dangerous financial fragilities that contributed significantly to the current crisis. A return to the excessive risk taking prevalent in some countries before the crisis is not an option," said the statement.

The statement said that since the onset of the global crisis, the group has developed and begun implementing sweeping reforms to tackle the root causes of the crisis and transform the system for global financial regulation. Substantial progress has been made in strengthening prudential oversight, improving risk management, strengthening transparency, promoting market integrity, establishing supervisory colleges, and reinforcing international cooperation.

The G20 leaders have enhanced and expanded the scope of regulation and oversight, with tougher regulation of over-the-counter (OTC) derivatives, securitization markets, credit rating agencies, and hedge funds. The leaders endorsed the institutional strengthening of the Financial Stability Board (FSB) through its Charter, following its establishment in London, and welcomed its reports to leaders and ministers. The FSB's ongoing efforts to monitor progress will be essential to the full and consistent implementation of needed reforms.