Senior regulators and bankers from around the world on Wednesday said progress had been made in improving the stability of the global financial system, but that much more needed to be done.

The comments came after a one-day meeting in New York designed to gauge progress made in improving financial system “plumbing” since a report last July by an influential group of bankers identified a number of areas that needed improvement.

Gerald Corrigan, a former president of the New York Fed, who convened Wednesday’s meeting, said progress had been “significant” but added that the meeting “understood a great deal of effort lies ahead in fully addressing these issues.”

Mr Corrigan, a managing director at Goldman Sachs, also led last year’s 300-page report, called “Counter-party Risk Management Policy Group II”, to underline its link with “CRMPG I”, the report that followed the implosion of Long-Term Capital Management, a hedge fund, in 1998.

Problems involved risk management, particularly concerning complex financial products such as credit derivatives, for which regulators and the private sector have sought to develop international standards.

“The model of private and public sector co-operation, and collective action is functioning very well and its likely to have broader application,” said Mr Corrigan yesterday. “The complexity and speed of financial markets is going to get more complex, make no mistake.”

Timothy Geithner, president of the Federal Reserve Bank of New York and Sir Callum McCarthy, chairman of the UK’s Financial Services Authority, appeared on a panel with Annette Nazareth, one of five commissioners at the US Securities and Exchange Commission, and Tommaso Padoa-Schioppa, a former member of the European Central Bank’s governing board and chairman of the International Accounting Standards Board.

“There’s a fundamental difference between the way that risk managers and accountants look at the world and it doesn’t make sense. We need to square that circle,” said Mr Corrigan.

Michael Alix, chief risk officer at Bear Stearns and one of the organisers, said: “For regulators to co-operate and understand issues in a similar way is very important. That global firms are tracked in the same way is also important and we are seeing a tremendous amount of progress in co-operation among regulators.”

Progress has already been made in clearing up settlement issues in the rapidly growing credit derivatives market after the New York Fed gathered leading dealers last September and ordered them to work together to clear up mounting backlogs of unconfirmed trades.

Regulators had feared that a large bankruptcy or other major credit event would see other markets grinding to a halt as the banks that form the hub of the world’s financial system struggled to determine their exposure and who owned what.

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