Top global financial services group IIF proposed tougher standards for the industry in the wake of eight months of markets turmoil and lashed out at accounting rules.
The Institute of International Finance called for an urgent rethink of accounting rules that force banks to reflect current prices of assets they own despite difficult market conditions.
"Many firms need to improve their risk management, liquidity management and conduit underwriting approaches significantly," said IIF chairman Josef Ackermann, unveiling the group's interim report in response to the financial market turmoil.
The IIF also proposed the idea of a market monitoring group including experts from across the industry to look out for problems that could trigger major financial market strains.
In the report, which comes ahead of the Group of Seven major economies meeting to discuss the crisis on Friday, the group also calls for the external review of how credit rating agencies work.
Banks are also criticised for the way they pay bonuses to staff, calling for the payouts to be linked to long-term rather than short-term performance. (Reuters)
IIF proposes tougher bank standards after credit crunch