Yesterday in Frankfurt, the Financial Stability Forum (FSF)hosted its bi-annual Plenary to discuss risks and vulnerabilities in the international financial system, and to review ongoing work to strengthen financial system stability and resilience.

The Forum assessed and addressed risks such as *Credit Risk Transfer (CRT) Markets, Private Equity and Leveraged Buyouts (LBOs)*, and *Hedge Funds and Counterparty Risk Management.* On this last issue, Members discussed how financial institutions are responding to associated risks, including developments in collateral, margining and stress testing practices. The FSF took note of the recent principles and guidelines regarding private pools of capital issued by the US President’s Working Group on Financial Markets and the draft principles for the valuation of hedge fund portfolios issued by IOSCO.

With regard to its follow up on other ongoing concerns, the forum discussed:

***• Effective Regulation & Related Policy Initiatives***

***• International Audit and Accounting Issues***

***• Planning and Communication for Financial Crises and Business Continuity

***• Reinsurance***

***• International Remittance Services***

**Offshore Financial Centres (OFCs)**

Also on the agenda was the FSF’s OFC Initiative, with the forum noting progress by several OFCs in improving compliance with international standards, including cross-border cooperation and information exchange.

The FSF urged its member bodies to continue to address remaining problems in OFCs and encouraged OFCs that fall short of international standards, that have not published their detailed IMF assessments, or are not actively contributing to the IMF Information Framework Initiative to make further progress in these regards.

The FSF plans to discuss a review of its OFCs initiative at its next meeting, scheduled to be held in New York on 26 September 2007.

*(The Financial Stability Forum (FSF) brings together senior representatives of national financial authorities (e.g. central banks, supervisory authorities and treasury departments), international financial institutions, international regulatory and supervisory groupings, committees of central bank experts and the European Central Bank. It seeks to give momentum to a broad-based, multilateral agenda for strengthening financial systems and the stability of international financial markets. The necessary changes are enacted by the relevant national and international financial authorities)*