GORDON BROWN OFFERS UK PARTICIPATION IN IMF/ WORLD BANK FINANCIAL SECTOR ASSESSMENT PROGRAMME

At today's Montreal meeting of the G20 group of countries, Chancellor of the Exchequer Gordon Brown has offered UK participation in the IMF/World Bank Financial Sector Assessment Programme (FSAP).

The Financial Sector Assessment Programme is an important innovation. An IMF/World Bank team takes an independent look at a country's financial sector and its regulation. It assesses the sensitivity of the financial sector to macro-economic shocks and compare the country's financial regulation with international best practice. This process will underpin and improve global financial stability, so it is important that all kinds of countries - emerging markets and world financial centres - take part in the process.

Gordon Brown said :

" With Sir Howard Davies, Chairman of the UK Financial Services Authority, I am offering UK participation in the Programme. The FSA is working towards implementation of a new regulatory framework under the Financial Services and Markets Act 2000. This will create a fully-integrated cross-sector framework for financial regulation.

I am confident that UK financial regulation is amongst the best in the world. Nevertheless, the UK financial sector is also amongst the most important in the global financial system. We will therefore welcome the opportunity of participation in the Program".

NOTES TO EDITORS

The Financial Sector Assessment Programme (FSAP) was launched in 1999 with a round covering 12 countries, including G20 members Canada, South Africa and India. This is being followed by FSAP coverage of 24 more nations.

The FSAP analyses the sensitivity of a country's financial institutions to macro-economic shocks; measures the depth, development and diversity of the parts of the country's financial system; evaluates the adequacy of legal and institutional infrastructure; and assesses compliance with selected international standards.

The FSAP also proposes priorities for strengthening the financial sector. The work is undertaken jointly by the Bank and the Fund in conjunction with the IMF Article IV process of economic and financial reporting on a country.

FSAP reports contain sensitive information and are confidential. Subject to these constraints, the UK Government will make public the recommendations of the FSAP. In addition, the material in the FSAP will be reflected in Article IV reports and other publications.

The G20 finance ministers and central bank governors are meeting in Montreal today. This international forum represents 19 countries, the European Union, the International Monetary Fund (IMF) and the World Bank. The G20 promotes discussion, and studies and reviews policy issues among industrialized countries and emerging markets with a view to promoting international financial stability.

The Financial Services and Markets Act 2000 establishes the new framework within which the Financial Services Authority will operate as single regulator for the whole financial services industry. The target for the completion of the necessary legislation and other preparations for the implementation of the Financial Services and Markets Act is around summer 2001. On the basis of that target timing, the UK would be ready for an FSAP in the fourth quarter of 2001.

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