UK: Prime Minister calls for "a new international financial architecture for the global age"

On the day that saw the Government provide the UK's largest banks with £37 billion in order to promote financial stability, the Prime Minister delivered a speech in which he called for "new international financial architecture for the global age". Here is an extract in which the Prime Minister touches upon several governance issues including director competency:

...we must now reform the International financial system around agreed principles of transparency, integrity, responsibility, good housekeeping and co-operation across borders.

First transparency. We must now insist on openness and disclosure, with an immediate adoption of the internationally agreed accounting standards - and the standards being brought forward for the valuation of assets. And transparency must extend also to markets including the trillion dollar credit insurance markets which now play such a central role in shifting risk around the system.

Second integrity. We must tackle once and for all the conflicts of interest which have distorted behaviour and undermined trust; and now lie at the heart of public concern. This includes a system of remuneration founded on long term success not short term irresponsibility. We must ensure that those who run our financial institutions have the right incentives.

Third responsibility. We must ensure that all board members have the competence and expertise to manage the risks and so effectively supervise their institutions and do not walk away from their obligations.

Fourth sound banking practice. We must have regulation and supervision that looks at both solvency and liquidity and ensures adequate protection throughout the economic cycle to prevent speculative bubbles when markets are rising and to cushion the impact of shocks when they are falling.

Fifth, we must have a new bretton woods - building a new international financial architecture for the years ahead. Sometimes it takes a crisis for people to agree that what is obvious and should have been done years ago can no longer be postponed. We must create a new international financial architecture for the global age".