Rather than looking at strict government regulations to address some of the challenges of global economic and financial liberalisation, policy makers today are concentrating instead on the need to make markets function better by adopting rules-based frameworks to guide financial policies and markets.

The intention behind this strategy is not to decree what markets are or are not allowed to do (regulate), but rather to foster market decisions on the basis of a clearer understanding of the risks involved and of the principles guiding financial policies. The International Monetary Fund (IMF), the World Bank, and the Organisation for Economic Cooperation and Development (OECD) are among several international bodies that have developed and promoted a range of voluntary international standards of good practices for economic policies and for the financial infrastructure. *(see below)*

The central idea behind this development is twofold:

* to reduce the risk of abrupt changes in market sentiment through greater transparency; and

* to enhance the resilience of financial systems when market sentiment does change, for example, as a result of external shocks

The International Monetary Fund and the World Bank are now preparing Reports on the Observance of Standards and Codes (ROSCs), working in cooperation with national authorities and standard-setting agencies, in order to assess a country’s progress in meeting these standards.

The aim is to provide constructive feedback that can help authorities identify and implement the regulatory and operational reforms needed for the development of their countries’ financial systems and their integration into global markets. The process also is used to set priorities for technical assistance by the multilateral institutions themselves, by other standard-setting bodies, and by bilateral donors.

The ROSCs also provide market participants with timely information on the progress by countries in implementing standards, which can serve as input into their risk assessment.

A total of 142 ROSC modules for 41 advanced, emerging market, and developing countries have been published to date. (See link below for published modules)

The Bahamas has a well regulated financial services industry, conforming to international best practices and standards. An International Monetary Fund Team was in The Bahamas earlier this year as part of a preliminary appraisal, in advance of participation by the nation in a Financial Sector Assessment Programme. Detailed assessments of the observance of relevant financial sector standards and codes are a key component of the FSAP.


*….International Standards of Good Practice*

**A. Financial Regulation and Supervision**

(i) Banking Supervision:

BCBS Core Principles for Effective Banking Supervision

(ii) Securities Regulation:

IOSCO Objectives and Principles of Securities Regulation

(iii) Insurance Supervision:

IAIS Insurance Core Principles

**B. Institutional and Market Infrastructure**

(i) Insolvency:

World Bank Principles and Guidelines for Effective Insolvency and Creditor Rights Systems

(ii) Corporate Governance:

OECD Principles of Corporate Governance

(iii) Accounting:

IASB International Accounting Standards (IAS)

(iv) Auditing:

IFAC International Standards on Auditing (ISA)

(v) Payment and Settlement:

CPSS Core Principles for Systemically Important Payment Systems

(vi) Market Integrity:

FATF Forty Recommendations on Money Laundering

**C. Macroeconomic Policy and Data Transparency **

(i) Monetary and Financial Policy Transparency:

IMF Code of Good Practices on Transparency in Monetary and Financial Policies

(ii) Fiscal Policy Transparency:

IMF Code of Good Practices on Fiscal Transparency

(iii) Data Dissemination:

IMF Special Data Dissemination Standard (SDDS)

IMF General Data Dissemination System (GDDS)


BCBS – *Basel Committee on Banking Supervision*

CPSS – *Committee on Payment and Settlement Systems*

FATF – *Financial Action Task Force*

IASB – *International Acounting Standards Board*

IAIS – *International Association of Insurance Supervisors*

IFAC – *International Federation of Accountants*

IOSCO – *International Organisation of Securities Commissions*