FACTBOX-German finmin discussion paper for Berlin summit

                                
 BERLIN, Feb 22 (Reuters) - European leaders meet in Berlin
on Sunday to prepare a common stance on overhauling global
financial rules ahead of a broader summit of G20 nations in
London on April 2.
                                
 Below are highlights from a discussion paper produced by the
German Finance Ministry for the meeting, which will be attended
by the leaders of Britain, France, Italy, Spain, the
Netherlands, Czech Republic and Luxembourg, the head of the
European Commission, finance ministers and central bankers.
                                
 
                                
 TRANSPARENCY AND ACCOUNTABILITY
                                
 - European countries should promote the buildup of
counter-cyclical mechanisms such as capital buffers and bank
provisioning in good times.
                                
 - Europe should support the reform of the governance of the
international accounting standard setting body to better assure
its accountability.
                                
 
                                
 ENHANCING SOUND REGULATION
                                
 - All significant entities operating in financial markets
should be submitted to appropriate regulations.
                                
 - Hedge funds should be accountable to supervisory
authorities and/or to market authorities competent for the
markets in which they operate. A registration rule for
hedge funds should be imposed combined with the collection of
structural data to obtain a better insight into the hedge fund
industry and its potential for systemic risk. Transparency and
disclosure standards with regard to investors, counterparties
and regulatory authorities should be improved and harmonised.
                                
 - Credit rating agencies should be subject to registration
and oversight going beyond a self-regulatory approach
                                
 
                                
 PROMOTING INTEGRITY IN FINANCIAL MARKETS
                                
 - Policies for executive pay and financial decision makers'
compensation should aim at avoiding excessive risk-taking and
focus on the short-term
                                
 - Concrete measures should be taken against uncooperative or
non-transparent jurisdictions in the areas of prudential
supervision, anti money laundering and terrorism financing and
taxation. The G20 are encouraged to consider a report on
possible measures to be taken against these jurisdictions
                                
 
                                
 STRENGTHENING INTERNATIONAL COOPERATION
                                
 - Effectiveness of colleges of supervisors is key for the
supervision of cross-border financial institutions. Faster
progress is necessary in both the implementation of the colleges
and their effective functioning, for example through
strengthening agreements on information exchange
                                
 
                                
 REFORM OF INTERNATIONAL FINANCIAL INSTITUTIONS
                                
 - Member countries agree with the need for an immediate
increase in the IMF's resources. The IMF's lending instruments
should be reformed in order to strengthen their effectiveness at
responding to crises
                                
 - On global financial risks, the IMF and the Financial
Stability Forum (FSF) should develop and enhance their
cooperation to set up effective early warnings mechanisms
                                
 - The extension of FSF membership should be swiftly
implemented, before the G20 Finance Ministers' meeting in mid
March.
 (Compiled by Noah Barkin)