G20 Information Centre
Financial Sector Regulation and Supervision
Finance Ministers and Central Bank Governors Meeting
Berlin, Germany, December 15 & 16, 1999
A countrys financial sector is the major channel through which borrowing and lending takes place. A poorly regulated or managed financial sector, or one with insufficient capital for the risks it takes, can increase a countrys vulnerability to financial crises.
Improved financial sector regulation and supervision can help ensure that financial institutions take adequate steps to manage risks. Appropriate financial sector policies can also help establish deep and liquid domestic capital markets, which reduce incentives for excessive external borrowing. In general, improved financial sector regulation and supervision can help prevent crises by making national economies less vulnerable to adverse developments at home and abroad.
The international community is taking steps to help countries strengthen their financial sectors, including:
At their meeting in Berlin, G20 ministers and governors will discuss how improved financial sector regulation can help countries reduce their vulnerability to financial crises. They will also consider how they can cooperate with the Financial Stability Forum and best make use of its work in identifying factors that can contribute to crises. As well, ministers and governors will discuss the role of the international community in helping national governments take stock of the health of financial sectors in individual countries.
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Source: Department of Finance, Canada
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