Rich may agree on plan to boost emerging marts

Rich may agree on plan to boost emerging marts

WASHINGTON (Reuter): Rich nations and their up-and-coming counterparts in the developing world are putting the finishing touches on a plan to lessen the risk of financial turbulence in emerging markets, U.S. officials said on Friday.

"We are moving toward consensus on a strategy to strengthen emerging market financial systems," U.S. Treasury Secretary Robert Rubin told reporters.

"This is critically important to reduce the risks of future financial crises."

The strategy includes agreement on a set of core guidelines and principles as well as specific recommendations for international financial institutions and regulators on how to help emerging market economies implement them, he said.

The plan, which was worked out by industrial nations and emerging market economies and which is expected to be unveiled next week, covers both the banking and securities fields.

The guidelines will not be mandatory, but may be used by the International Monetary Fund and World Bank in structuring their loan programs for some developing countries.

Morris Goldstein, of the Institute for International Economics think tank, said that three-fourths of the world's economies have been hit by banking crises over the past 15 years.

Developing nations alone have spent almost $250 billion bailing out their banks, he said.

Banking regulators worldwide agreed earlier this month on the basic principles of supervision to strengthen global financial stability.

The 25 core principles unveiled by the Basle Committee on Banking Supervision represented the first truly global effort by bank supervisors to create a worldwide standard.

The report to be released next week will be broader than that and will cover securities regulation and other legal issues as well as banking.

It was drawn up by representatives from eight industrial countries -- the United States, Japan, Germany, France, Italy, Britain, the Netherlands and Sweden -- and seven emerging markets -- Argentina, Hong Kong, Indonesia, South Korea, Mexico, Poland and Thailand.

Rubin said that finance ministers and central bank chiefs from leading industrial nations will discuss the strategy when they gather on Sunday on the fringes of the IMF/World Bank semi-annual meeting here.