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Friday, October 12, 2007

Early Warning System

Alistair Darling, the Chancellor of The Exchequer, is going to propose the introduction of an international early warning system of potential financial market turbulence at the G7 meeting in Washington this month.

Darling believes that an alert system would strengthen surveillance of the financial sector.


"I will urge faster, rapid implementation of international agreements on solvency, accelerated work on international standards for regulating liquidity, more transparent information on credit ratings and action to improve the transparency of off-balance sheet vehicles."

The danger of an early warning system is that, if it too sensitive, it may just spark the panic and meltdown that it was trying to avoid (such as the case with automatic share trading systems, that sell shares when their price moves beyond certain preprogrammed parameters).

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