(Adds Draghi's remarks on "too big to fail" and exit strategies for financial measures to deal with crisis.)
By Terence Poon
Of DOW JONES NEWSWIRES
ST. ANDREWS, Scotland -(Dow Jones)- The Financial Stability Board will review how nations are implementing the principles on compensation of bank executives by the end of March 2010, and come up with a template to do so, Chairman Mario Draghi said Saturday.
"There is a great interest in the international scene that countries do implement these principles across the board," he said after the meeting of finance ministers and central bankers from the Group of 20 nations ended.
In September, the G20 leaders endorsed in Pittsburgh the FSB's recommendations calling for stricter controls on pay, including deferring more than half of the pay of top bank executives for a number of years.
Asked about French concerns the U.S. Federal Reserve is interpreting the standards loosely, Draghi said it would be only possible to tell after the review is completed.
He described caps on compensation as a political issue that needs to be discussed at the political level.
Draghi added the FSB will finalize by February 2010 a "toolbox" of measures to encourage nations that don't meet global standards to do so, as part of broader framework to encourage countries to adhere with international standards.
The FSB is also working on the issue of financial firms that are "too big to fail," said Draghi. The issue is "how do we reduce the moral hazard that this crisis has left us as a legacy," he added.
Stronger and consolidated financial supervision would lower the chance of institutions failing, while better laws to resolve failed institutions would help make the financial system more resilient, he said.
He added derivatives trading on centralized counterparty platforms or regulated exchanges would lower the risks that financial troubles will spread across institutions.
Asked if there is a consensus on "living wills" -- data on counterparties and contingency funding plans that banks give to regulators to quickly settle financial contracts by big institutions -- Draghi said: "It's too early to say that there is or to look for consensus."
"We're still in the early stages of the study," he said.
Noting some of the steps to help financial firms during the crisis, such as capital injections and guarantees, are still in place, Draghi cautioned that a risk is that "some jurisdictions may continue to support unsustainable business models," especially as some banks may not be able to wean themselves off aid.
He urged nations, when unwinding such measures, to do so in a transparent and internationally coordinated way, so as to coordinate to avoid hurting market confidence.
Draghi declined to comment on U.K. Prime Minister Gordon Brown's call earlier Saturday for a tax on global financial transactions to pay for the cost of future banking crises.
Draghi said the tax wasn't discussed at the G20 meeting and no details were provided.
-By Terence Poon, Dow Jones Newswires; 8610 8400-7799; terence.poon@dowjones.com
(END) Dow Jones Newswires
November 07, 2009 13:55 ET (18:55 GMT)