2002 APEC Finance Ministerial Meeting

1. We, the Finance Ministers of APEC, met in Los Cabos, México, along with representatives of the International Monetary Fund, the World Bank, the Asian Development Bank and representatives from the private sector.

2. With the approach of the first anniversary of the terrorist attacks of September 11, 2001, we discussed the importance of our efforts to combat the financing of terrorism and money laundering. We also focused our discussions on examining ways to strengthen global and APEC regional economic growth; advance fiscal and financial reforms; and improve the allocation of domestic savings for economic development.

3. We recognize that the majority of indicators suggest that the global economic recovery is underway. The current recovery in APEC economies has been supported by robust consumer spending and intra-regional trade. Nevertheless, uncertainties regarding the strength and pace of the expansion remain.

4. Although most APEC economies are enjoying stronger economic performance, some still face structural, fiscal and financial challenges. To increase growth and improve living standards, we are committed to a sound macroeconomic and financial environment and promoting good corporate governance to strengthen investor confidence, elements necessary to create a conducive environment for an efficient and innovative private sector.

5. Ministers emphasized the importance of promoting a more open multilateral trade system to reinforce global economic recovery, and reaffirmed their pledge to reject the use of protectionism and their commitment to abide by multilateral rules.

6. We remain committed to disabling the financial networks of terrorists and have released an action plan to combat the financing of terrorism. We will work cooperatively with the UN, the IMF, the World Bank, FATF and other relevant international and regional bodies to promote the adoption, implementation, and assessment of international standards to combat terrorist financing and money laundering. We welcome the decisions of the IMF and World Bank to add the FATF 40 recommendations for anti-money laundering and the eight special recommendations (FATF 40 + 8) to the areas on which the Reports of the Observance of Standards and Codes are prepared. We call on the IMF and Multilateral Development Banks to provide technical assistance, in coordination with the UN, FATF, FATF-style regional bodies and donor nations, to economies that need help in implementing these international standards.

7. We note the importance of preventing terrorists from misusing alternative remittance systems and non-profit organizations, including charities, as a source of or mechanism to move funds. We welcome the work of the FATF on charities and of one of the regional FATF-style bodies on alternative remittance systems and encourage continued work on these issues. We ask our officials to evaluate ways of discouraging improper use of alternative remittance systems. We will increase our efforts to investigate and prosecute money launderers and terrorist financiers. We welcome the efforts of FATF and of one of the regional FATF-style bodies to expand their activities to include combating terrorist financing. We encourage these bodies to examine the use of bulk cash in facilitating money laundering and the financing of terrorist activities. We support the work of the international information-sharing body of Financial Intelligence Units and encourage enhanced international information sharing among financial and enforcement authorities.

8. Prudent fiscal management will help maintain macroeconomic stability, lower interest rates and higher economic growth. We are committed to continue working towards prudent and transparent fiscal management, including avoiding significant structural fiscal deficits and enhancing the efficiency of public expenditure.

9. We recognize that more open, better regulated, transparent and deeper financial systems promote higher and more sustainable rates of growth. We need to continue strengthening the soundness and efficiency of financial systems and improve their capacity to stimulate growth and withstand economic shocks, particularly through better credit culture and risk management. We recognize that the further strengthening of banking supervision, market disciplines and corporate governance in the financial system, based on sound legal systems and accounting standards and practices, are essential to promote efficient financial systems. We emphasized that close observance of international standards and codes remains a useful reference to guide economies in promoting financial stability.

10. Adequate levels of savings are an essential foundation for economic stability and growth. In addition, in a globalized economy, the key to sustainable long-term economic growth is to channel both domestic and foreign resources into their most productive forms of investment. Therefore, it is essential to put in place the institutional framework and structural reforms that allow the most efficient allocation of savings.

11. We agree that financial sector liberalization supported by a strong supervisory and regulatory framework, has an important role to play in enhancing competition in the financial sector, widening the options available to hedge against risk, and fostering the allocation of savings to the most productive investments. We encourage APEC economies to carry out appropriate steps to promote more openness, diversity and competitiveness in their financial markets, including through the development of regional bond markets.

12. We welcome the substantial progress made by APEC members in deepening domestic reforms and implementing initiatives to prevent and manage effectively international financial crises. In this regard, we welcome the progress made by policy initiatives under the APEC Finance Ministers' Process in contributing to healthy financial and corporate sector in this region. We also encourage participation in the Reports on Observance of Standards and Codes (ROSCs) and Financial Sector Assessment Programs (FSAPs) as ways of strengthening domestic financial systems. We note the recent developments in regional financial cooperation among the ASEAN+3 countries, including significant progress in the Chiang Mai Initiative, efforts to enhance policy dialogue in the region, monitoring of capital flows and early warning system.

13. We note that IMF quotas should adequately reflect developments in the international economy.

14. We welcome the opportunity to have a dialogue with the APEC Financiers' Group (AFG) on the public and private sector actions against the financing of terrorism and on the promotion of corporate governance in the financial sector. We also appreciate the reports by: the APEC Business Advisory Council (ABAC) on their work in relation to the efforts aimed at strengthening regulation and supervision of the banking sector; the Pacific Economic Cooperation Council (PECC) on the Finance Forum recommendations to ensure financial stability in the region; and the APEC Economic Committee (EC) on the results of the Micro Banking Development Regulation and Supervision Symposium that took place last July in Mexico City.

15. We would like to thank the people and Government of Mexico for the hospitality extended to all delegations and the excellent arrangements they have made to make the ninth APEC Finance Ministers' Meeting a success. We will meet again for the 10 th APEC FMM in Phuket, Thailand, on September 4th-5th, 2003.