Financial system 'not out of woods yet': Global regulator

BASEL, SWITZERLAND: The head of a group tasked with global financing reform said on Saturday the world's financial system had recovered strength significantly but was not yet out of the woods.

"We are more or less back at what we were before Lehman, but we are not back to before the crisis," Financial Stability Board chair and Italian central bank chief Mario Draghi said.

He was referring to the sudden collapse of US banking giant Lehman Brothers last September, which plunged financial markets and the banking and credit system into turmoil.

"An improvement yes, out of the woods, not yet," he added after the FSB's inaugural meeting.

Draghi pointed to two "positive signs": the way US banks in particular had managed to raise 10 billion dollars in private capital recently, and the strength of corporate bond issuance.

However, Draghi also highlighted the unfinished restructuring of banks and the fragile credit channels among the "uncertainties".

The FSB is part of a broadened and strengthened Financial Stability Forum, including central banks, the IMF, World Bank, national regulators and governments, tasked with permanent oversight of the financial system.

It is now expanded to those from the Group of 20 major developed and developing countries, as well as Spain, Switzerland, the European Commission and other countries.

The G20 agreed in April in London that the FSB should look at new rules for ensuring stability in the global financial system so as to avoid a repeat of the crisis.