By Alyce Andres-Frantz

CHICAGO (MNI) - Athanasios Orphanides, European Central Bank governing council member and Cyprus central bank governor, Friday said crisis resolution framework at the global level is needed to promote worldwide financial stability.

Orphanides who spoke on a panel at the 12th annual International Banking Conference at the Chicago Fed said the recent crisis highlighted the lack of global coordination and harmonization in accounting, regulation and supervision.

"International harmonization and convergence is a practical way to minimize this risk," he said. While "progress has been slower than desirable," Orphanides urged that the same rules and concepts need to apply globally.

Orphanides said "the emerging signs of recovery are welcome, though unusually high uncertainty persists."

While "initiatives on bank resolution frameworks are making progress," Orphanides said the IMF and World Bank initiatives on legal, institutional and regulatory framework for national bank solvency regimes is expected to produce a report in Spring 2010.

Moreover, Orphanides said "effective regulation to curtail banks' build-up of leverage is required. In an effort to serve as "a safety valve against weaknesses in the Basel II capital requirements, a supplementary leverage ratio would ensure a minimum capital buffer that protects against underestimated risk."

A systemwide macro-prudential approach towards supervisory oversight to ensure overall stability in the financial system, is a "task best suited for the central banks," Orphanides said.

"At the international level, the envisaged closer cooperation between the IMF and the FSB is expected to contribute towards better surveillance of marco-prudential risks in the international financial system," he said.

** Market News International Chicago Bureau: 708-784-1849 **