The Group of Eight (G8) finance ministers on Saturday agreed on a set of common principles and standards for propriety, integrity and transparency in a bid to regulate financial institutions in a globalized world economy.

The ministers, meeting in the Italian city of Lecce, agreed in the Lecce Framework that world economies "are in the middle of the worst crisis since the Great Depression. The breadth and intensity of the prolonged downturn have revealed the importance of strengthening our commitment to standards of propriety, integrity and transparency."

They believe excessive risk taking and the violation of these basic principles" contributed to undermine international economic and financial stability. This occurred both in areas that relied on self regulation and market discipline and in fields with formal rules and oversight, revealing flaws in the functioning of markets."

For the market economy to generate sustained prosperity, fundamental norms in economic interactions must be respected and the magnitude and reach of the crisis has demonstrated the need for urgent action in this regard, the statement said.

"Reform efforts must address these flaws in international economic and financial systems with resolve. This will require promoting appropriate levels of transparency, strengthening regulatory and supervisory systems, better protecting investors, and strengthening business ethics."

During their two-day meeting, the G8 finance ministers discussed and agreed on the objectives of a strategy, "the Lecce Framework," to create a comprehensive framework, building on existing initiatives, to identify and fill regulatory gaps and foster the broad international consensus needed for rapid implementation.

The Lecce Framework recognizes that there is a wide range of instruments, both existing and under development, which have a common thread related to propriety, integrity and transparency and classifies them into five categories: corporate governance, market integrity, financial regulation and supervision, tax cooperation, and transparency of macroeconomic policy and data.

According to the framework, specific issues covered include executive compensation, regulation of systemically important institutions, credit rating agencies, accounting standards, the cross-border exchange of information, bribery, tax havens, non-cooperative jurisdictions, money laundering and the financing of terrorism, and the quality and dissemination of economic and financial data.

The G8 countries are Britain, Canada, France, Germany, Italy, Japan, the United States and Russia. Italy holds the current G8 presidency.

(Xinhua News Agency June 14, 2009)