These slides provide insight into the last changes in global financial system after the 2007 recession and the adoption of the Basel III accord, the international standard setting bodies and its functions in terms of monitoring the global financial institutions, it does also afford the late made decision regarding the IMF quotas, deposit insurance, digital deposits and other issues related to clearing and margining the over-the-counter derivatives. For more details, I have attached some useful sources and references with the slides.

1. RECENT DEVELOPMENTS IN
INTERNATIONAL FINANCE
MANAGEMENT
THE LAST FIVE YEARS

2. THE OUTLINES
•Introduction.
•Key regulations & proposals.
•International finance governance structure.
•New standards for evaluating financial management.
•New framework for the international finance governance
structure.
•Membership reforms.
•Global financial structure.
•IMF Quotas.
•Challenges for the international financial system.

3. INTRODUCTION
• The international financial system has been reshaped
after every crisis by new regulations.
• The 1929-30 great depression: Glass-Steagall Act.
• The 1973-74 oil price crisis: Basel committee on banking
supervision.
• The 1982 Latin America debt crisis: Basel I.
• The 1994-95 Mexican crisis and the 1998-99 Asian crisis:
Basel II.
• The 2001-02 Inron, WorldCom: Sarbanes Oxley.

4. KEY REGULATIONS AND PROPOSALS
• Adoption of Basel III capital requirements, including a
countercyclical capital buffer and a surcharge for globally
systemically important financial institutions (G-SIFIs), both
of which represent a first international attempt to institute
a macro prudential tool.
• The rules are: a 4.5 percent basic and a 2.5 percent
conservation buffer requirement for all banks; a 2.5 percent
countercyclical buffer in the boom phase of the financial
cycle. Altogether, the highest minimum requirement in the
form of common equity (Tier 1) would be 12 percent. In
addition to this would be 1.5 percent alternative Tier 1
equity and 2 percent Tier 2 (hybrid) forms of capital. These

5. KEY REGULATIONS & PROPOSALS (CONT’D)
• Agreement reached on one of two envisioned liquidity standards –
the Liquidity Coverage Ratio (LCR).
• The LCR, announced early 2013 by the BCBS, requires banks to
have enough liquidity, defined as having on balance sheet
certain assets (High Quality Liquid Assets) and access to some
facilities (including some forms of central bank liquidity), to
cover 30 days of outflows.
• Some OTC derivatives reforms.
• For requirements of the reporting and centralized clearing of
some types of OTC derivatives in some jurisdictions, as well as
guidelines and minimum standards for centralized
counterparties (CCPs) by the Committee on Payments and
Settlement Systems and the International Organization of

6. KEY REGULATIONS & PROPOSALS (CONT’D)
• Basel Committee on Banking Supervision (BCBS) and the International
Organization of Securities Commissions (IOSCO) created the Working
Group on Margining Requirements (WGMR) to establish global
requirements for margining of non-cleared OTC derivatives. In
September 2013, the WGMR published a final policy framework for
non-centrally cleared derivatives. The final framework imposes wide-
ranging changes such as the universal exchange of variation margin
(VM) and initial margin (IM). Compliance with VM requirements across
all regions started December 1, 2015.
• Banks, financial institutions and companies are asked to disclose more;
formal rules requiring the retention of underlying assets have been
instituted in various jurisdictions; and accounting information on off-
balance sheet vehicles, such as Special Investment Vehicles (SIVs) and
conduits, must be consolidated.

7. KEY REGULATIONS & PROPOSALS (CONT’D)
• The too-big-to-fail financial institutions has been revised
in which the systemically important financial institutions
(SIFIs) are subjected to more intensive prudential
regulatory requirements, including higher capital
requirements and more scrutiny of their cross-border
operations.
• Assessment of the global systemic importance of banks
(G-SIBs) and insurers (G-SIIs) have been issued and 28
G-SIBs and 9 G-SIIs have been designated.
• Capital requirement include an up to 3.5% G-SIBS

8. INTERNATIONAL FINANCE GOVERNANCE
STRUCTURE
G20
Financial Stability Board (FSB)
International Monetary Fund (IMF)
Financial Action Task Force (FATF)
International Accounting Standards Board (IASB)
Basel Committee on Banking Supervision (BCBS)
International Association of Deposit Insurers (IADI)
International Association of Insurance Supervisors (IAIS)
Committee on Payment and Settlement Systems (CPSS)
International Organization of Securities Commissions (IOSCO)
International Auditing and Assurance Standards Board (IAASB)
Organization for Economic Co-operation and Development (OECD)
World Bank (WB)

9. NEW STANDARDS FOR EVALUATING FINANCIAL
MANAGEMENT
• FSB has designated the Standards under the 12 policy
areas as key for sound financial systems & deserving of
priority implementation depending on country
circumstances. While the key standards vary in terms of
their degree of international endorsement, they are
broadly accepted as representing minimum
requirements for good practice that countries are
encourages to meet or exceed.

10. • Macroeconomic Policy and Data Transparency
• Financial Regulation & Supervision
Area Standard Issuer
Monetary & financial policy
transparency
Code of Good Practices on Transparency in
Monetary & Financial Policies
IMF
Fiscal policy transparency Code of Good Practices on Fiscal Transparency IMF
Data dissemination Special Data Dissemination Standard
General Data Dissemination System
IMF
Area Standard Issuer
Banking supervision Core Principles for Effective Banking Supervision BCBS
Securities regulation Objectives and Principles of Securities Regulation IOSCO
Insurance supervision Insurance Core Principles IAIS

11. • Institutional & Market Infrastructure
Area Standard Issuer
Crisis resolution and deposit
insurance
Core Principles for Effective Deposit Insurance
Systems
BCBS/IAD
Insolvency Insolvency and Creditor Rights World Bank
Corporate governance Principles of Corporate Governance OECD
Accounting and Auditing International Financial Reporting Standards (IFRS)
International Standards on Auditing (ISA)
IASB
IAASB
Payment, clearing and
settlement
Core Principles for Systemically Important
Payment Systems
Recommendations for Securities Settlement
Systems
Recommendations for Central Counterparties
CPSS
CPSS/IOSC
O
CPSS/IOSC
O
Market integrity Forty Recommendations and 9 Special
Recommendations on Money Laundering and
Terrorist Financing
FATF

12. NEW FRAMEWORK FOR INTERNATIONAL
FINANCE GOVERNANCE STRUCTURE
• G20 was established in 1999, but since the onset of the Global
Financial Crisis it has taken an enhanced role in shaping international
financial regulatory arrangements.
• The FSB undertakes analysis of topics which are relevant across
financial subsectors – each of which has its own international
standard setters. Those include the Basel Committee (banking), IOSCO
(securities markets), IADI (deposit insurance), and IAIS (insurance), as
well as the International Accounting Standards Board (IASB) and the US
Financial Accounting Standards Board (FASB).

13. CONT’D
• An expansion of IMF’s role, especially by substantial increases in the
funds available for crisis lending and emergency liquidity provision.
By taking this step, IMF can function as lender of the last resort.
However the available funds at this moment may be insufficient to
fully play this role.
• The memberships of the key international standard-setting bodies
(ISSBs) have been widened to include major emerging economies.
The Financial Stability Board (FSB), which was established as the
successor to the FSF in 2009, and the BCBS have extended their
memberships to incorporate all G20 members. The CPMI has
opened its membership to Brazil, China, India, Korea, Mexico,
Russia, Saudi Arabia and South Africa. In addition, Brazil, China and
India have joined the IOSCO’s Technical Committee.

14. CONT’D
• The financial regulation has shifted away from a sole focus on micro-
prudential regulation and supervision - the regulation of individual
banks and financial firms - to a broader focus on the whole financial
system and how it relates with the broader economy. This is called
macro-prudential regulation.
• macro-prudential regulation has involved, for instance, devising
regulatory standards to measure and limit leverage levels in the
financial system, meeting the counter-cyclical capital
requirements that ask banks to hold more regulatory capital
during good times and permitting them to hold less than would
be usually required during the bad times.
• In general, the evolved topics of the international standard
setting bodies revolve around effective resolutions regimes, the
financial inclusion services, inclusive financial consumer

15. ISSB MEMBERSHIP REFORMS (OLD MEMBERS)
FSB BCBS
IOSCO
Technical
Committee
CPSS
Australia X (2) X X X
Belgium X X
Canada X (3) X X (2) X
France X (3) X X X
Germany X (3) X X X
Hong Kong X (1) X X X
Italy X (3) X X X
Japan X (3) X X X
Luxembourg X
Netherlands X (2) X X X
Singapore X (1) X X
Sweden X X
Switzerland X (2) X X X
UK X (3) X X X
US X (3) X X X

16. ISSB MEMBERSHIP REFORMS (NEW MEMBERS)
FSB BCBS
IOSCO Technical
Committee
CPSS
Argentina X (1) X
Brazil X (3) X X X
China X (3) X X X
India X (3) X X X
Indonesia X (1) X
Mexico X (2) X XX X
Russia X (3) X X
Saudi Arabia X (1) X X
South Africa X (1) X X
South Korea X (2) X X
Spain X (2) XX XX
Turkey X (1) X

17. REPRESENTATIVENESS OF THE FINANCIAL STABILITY
FORUM/BOARD MEASURED BY WORLD RESERVES
Rest of the
world
74%
Old FSF
26%
Rest of the world Old FSF
Rest of the
world
20%
New FSB
80%
Rest of the world New FSB
Old FSF
Representation
New FSF/B
Representation

18. GLOBAL FINANCIAL STRUCTURE

19. FINANCIAL STRUCTURES IN EURO ZONE, JAPAN, UK & US

20. IMF QUOTAS
• Quotas are denominated in Special Drawing Right (SDR), IMF unit
of account.
• In December 2010 the IMF quotas was agreed to be increased by
100%.
• The conditions for implementing the quota increases agreed
under the 14th General Quota Review were met on January 26,
2016. As a result, the quotas of each of the IMF’s 189 members
increased to a combined SDR 477 billion (about US$668 billion)
from about SDR 238.5 billion (about US$334 billion).
• The loan size per quota of IMF members was raised from 300% to
600% in average, in exceptional cases, the loan size reached
around 2,300% of quota for Portugal and 2,158% of quota for

21. CHALLENGES FOR INTERNATIONAL FINANCIAL
SYSTEM
•The rise of the shadow banking system.
•Repos and hot money.
•More regulations are needed for financial
intermediaries.

22. The end