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Ottawa, June 7, 1999
1999-051

Canada's Finance Minister Addresses Chicago Council on Foreign Relations

Finance Minister Paul Martin today addressed the Chicago Council on Foreign Relations on the subject of reforming the international financial architecture to limit the frequency and severity of financial crises.

Minister Martin's remarks in Chicago – less than a week before the G-7 finance ministers' June 12 meeting in Frankfurt – addressed three aspects of financial architecture reform: 

• the need for further evolution in the mandate and membership of the Interim Committee of the International Monetary Fund (IMF);

• the future development of the Financial Stability Forum (FSF); and

• the need for the private sector to play a greater role in preventing and resolving international financial crises.

"The IMF's broad membership and its status at the centre of the international monetary system make the Fund's Interim Committee a natural starting point in our efforts to build a permanent and inclusive forum for discussing issues of importance to the smooth functioning of the global economy and the international financial system," Minister Martin said.

He also described the recent creation of the FSF as an important development. Designed to strengthen financial sector supervision and regulation, the FSF is composed of representatives of the finance ministries, central banks and financial sector supervisors of G-7 countries. It also includes representatives of the IMF, World Bank, Organization for Economic Co-operation and Development, Bank for International Settlements and various international supervisory bodies.

Minister Martin placed particular emphasis on the need for the private sector to play a greater role in preventing and resolving international financial crises. "Getting the private sector to share more of the risk is appropriate because the availability of official bailouts only encourages imprudent lending, which in turn increases the risk of future crises," he said. "In addition, public resources are simply too small to continue to cover the entire cost."

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