The G8 Finance Ministers have agreed to a framework in recognition that *”the breadth and intensity of the prolonged downturn have revealed fundamental weaknesses of the global economic and financial systems”.* The Ministers – from Canada, France, Germany, Italy, Japan, Russia, the UK and US – issued a communiqué after the conclusion of their talks in the southern Italian city of Lecce, June 12-13.
The Ministers suggested that the economic turmoil of the last year was showing signs of subsiding. *”But the situation remains uncertain and significant risks remain to economic and financial stability.”*
**Information Exchange & AML/CFT**
The meeting also addressed international standards for information exchange, with the communiqué speaking to this as well:
*“We welcome progress in negotiations of agreements on the exchange of information for tax purposes. We urge further progress in the implementation of the OECD standards and the involvement of the widest possible number of jurisdictions, including developing countries. It is also essential to develop an effective peer review mechanism to assess compliance with the same standards. This could be delivered by an expanded Global Forum.*
*“We also look forward to an update on progress on the G20 agreement to tackle tax havens at the OECD Ministerial meeting.“*
On anti-money laundering and terrorism financing, the ministers said they welcome FATF engagement with the G20 to fight against both. *“We are also committed to working with FATF on improving international standards and their global implementation, including preparation for the next round of mutual evaluations, promoting international cooperation and reinforcing actions on jurisdictions with vulnerabilities. FATF should report back by September on its progress in identifying uncooperative jurisdictions.”*
**US Regulatory Reform**
US Treasury Secretary Geithner in his remarks at the 2-day meeting also emphasized the importance of protecting the integrity of the international financial system from threats of illicit finance. He said, *“We strongly support the continuing work of the Financial Action Task Force (FATF) in raising international standards and improving their global implementation in order to reduce the vulnerability of the financial system to those who would seek to abuse it for criminal or terrorist purposes.”*
The Secretary noted the steady progress made by the US, confirming that next week, comprehensive proposals for regulatory reform in the United States will be outlined. “*Because risk does not respect borders, we will put forward several international proposals in our reform package that will help to raise standards globally.”*
**Global Legal Standard**
On an initiative driven by Italy, the meeting agreed to develop what it called the **Lecce Framework** – *“a set of common principles and standards regarding the conduct of international business and finance”*, which Italian Finance Minister Tremonti has christened a Global Legal Standard. Italy took over the Presidency of the G8 on 1 January.
The standards, reportedly to be elaborated by the OECD, focus on five areas: corporate governance, market integrity, financial regulation and supervision, tax co-operation and transparency of macroeconomic policy and data.
Recommendations agreed by the Ministers in Lecce are to be presented to the main G8 Summit of Leaders in L’Aquila in July and at the expanded G20 meeting scheduled in Pittsburgh, US, in September. Prior to the Finance Ministers meeting, G8 Development Ministers met June 11-12 in Rome, and G8 Foreign Ministers are scheduled to meet in Trieste on June 25-27.