G20 London Declaration on further steps to strenghten the financial system, 4-5 September 2009

Sectors : Economic governance and public finance management, Employment and Training, Financial Institutions, markets, services and microfinance, Transparency and accountability
Organisation : G20
Date made: 
2009
Level: 
Ministerial
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Commitments in: Private Sector development and financial services for the poor - Financial Institutions, markets, services and microfinance

“We, the G20 Finance Ministers and Central Bank Governors, reaffirmed our commitment to strengthen the financial system to prevent the build-up of excessive risk and future crises and support sustainable growth...

...But more needs to be done to maintain momentum, make the system more resilient and ensure a level playing field, including the following actions:...

…1. Clear and identifiable progress in 2009 on delivering the following framework on corporate governance and compensation practices. This will prevent excessive short-term risk taking and mitigate systemic risk, on a globally consistent basis building on and strengthening the application of the FSB principles:

• greater disclosure and transparency of the level and structure of remuneration for those whose actions have a material impact on risk taking;

• global standards on pay structure, including on deferral, effective clawback, the relationship between fixed and variable remuneration, and guaranteed bonuses, to ensure compensation practices are aligned with long-term value creation and financial stability; and,

• corporate governance reforms to ensure appropriate board oversight of compensation and risk, including greater independence and accountability of board compensation committees. We call on the FSB to report to the Pittsburgh Summit with detailed specific proposals for developing this framework, which could be incorporated into supervisory measures, and closely monitoring its delivery. We also ask the FSB to explore possible approaches for limiting total variable remuneration in relation to risk and long-term performance. G20 governments will also explore ways to address non-adherence with the FSB principles.”

Scope: 
International