ROME (Thomson Financial) - The Financial Stability Forum said its report to the G7 on the recent turmoil in financial markets will recommend concrete measures to be taken in response to the credit crisis.
The FSF is to deliver its report to G7 finance ministers and central bankers at their meeting in Washington next month.
It said the report will identify the key weaknesses underlying the turmoil and recommend actions to enhance market and institutional resilience in future.
The FSF said the report will set out specific policy recommendations on prudential oversight of capital, liquidity and risk management and on transparency, disclosure and valuation practices.
The report will also cover the role and uses of credit ratings, and the authorities' responsiveness to risks and their arrangements to deal with stress in the financial system, it said.
'These recommendations are concrete and operational and, if approved, the FSF will report on their prompt implementation,' it said at the end of a two-day meeting in Rome.
The FSF said the financial system faces a number of significant near-term challenges, with severe strains evident in interbank and other lending markets.
It said the deleveraging under way since last summer is being complicated by a lack of transparency and valuation difficulties for some credit instruments.
'Financial institutions should continue enhancing their disclosures of risk exposures and refining valuation judgements concerning structured credit activities and poorly performing assets on and off the balance sheet,' it said.
It said authorities in the main financial centres are in continuous contact and closely monitoring developments, and added that they will act cooperatively and swiftly to investigate and penalise any market abuse or manipulation.
Central banks have also said that they will continue to provide liquidity to address market pressures as long as needed, it noted.
The FSF brings together senior representatives from international financial institutions, regulatory groups and the national financial authorities of the major economies. It was established by the G7 in 1999 to promote international financial stability. steve.whitehouse@thomson.com sw COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.