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G20 Agrees On Bank Regulation, Tax Stance

For a fair and co-ordinated implementation of international standards, including Basel II

The finance ministers of the G20 nations have unanimously agreed on a framework of banking regulation and compensation practices, confirming future course of action against nations not complying with tax information exchange standards – reported

Reportedly, the final communiqué stated that there should be clear and identifiable progress in 2009 on delivering the following framework for banks on corporate governance and compensation practices: 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.

It has been reported that eventhough, there was no mention of the taxation of exorbitant bank bonuses or talk of limiting bankers’ salaries, the ministers asked the Financial Stability Board (FSB) to explore ways to limit total variable remuneration in relation to risk and long-term performance. They had urged for a fair and coordinated implementation of international standards, including Basel II, to prevent the emergence of new risks and regulatory arbitrage.

The ministers argued that regulators should cooperate and share information to facilitate efficient oversight of globally active hedge funds. They had also resolved to use countermeasures against tax havens from March 2010, reported the news source.