By Brian Love and Huw Jones
PARIS/BRUSSELS, Feb 11 (Reuters) - G7 finance ministers are expected to renew commitments to better regulate and supervise banks and financial markets when they meet in Rome later this week, but renewed promises may be as far as it goes.
Information gleaned from officials in recent days indicates that stopping the rot of recession is the top, and perhaps sole, priority right now, even if reformers keep working away at rule changes to make markets less crisis-prone in future.
Some officials, however, say negotiators are getting close to agreeing on expanded membership of the Financial Stability Forum, which was set up by G7 countries after the Asian financial crisis in the 1990s and is now being pressed to embrace some of the key emerging market economies.
South Korea hopes it will be among those allowed to join the expanded FSF, and is awaiting news as early as the end of this week at the G7, Choongsoo Kim, South Korea's ambassador to the OECD told Reuters.
Others are less sure the names will come so fast, and big as that news may be for any new entrants, other outstanding issues are whether and to what extent the FSF, for now a moving circus of regulators and supervisors with a small secretariat, is turned into a more global rule-making institution.
That, officials say, is still a work in progress, even if the state of play in those negotiations is broached by FSF head and Italy central bank boss Mario Draghi in talks with ministers and central bankers in Rome, where they start with dinner on Friday and meet again on Saturday.
What to do, concretely, about supervising cross-border banks better controlling derivatives trading, or being more vigilant about tax havens and the role of credit rating agencies is all still under debate.
Some officials suggest it will be hard to conclude even when leaders of the G20 club of industrialised and emerging economic powers meet on April 2 for a summit British leader Gordon Brown is billing as the time to deliver on reform pledges G20 leaders made in November at a first summit on the financial crisis.
For factbox, double-click on [ID:nL9400262]
CENTRALISE
So far, governments in the G7 and G20 are working on setting up a larger number of so-called "colleges of supervisors" to enhance supervision of banks with operations in numerous countries, with a self-set end-March deadline to do so.
Some officials familiar with negotiations on that issue say the devil is in the detail and that proper supervision requires a more even balance of power within such collegiate groups -- between supervisors from a bank's home country and supervisors in the many host countries where the bank operates.
London School of Economics' Howard Davies, formerly head of Britain's Financial Services Authority, says that, difficult as it may be, there should be a pan-European supervisory body, an idea Italy once floated before it was shot down fast by Germany and Britain.
The Organisation for Economic Co-operation and Development agreed in a recent report on the euro zone, recommending either a pan-European agency or giving the European Central Bank the job of topping some form of network of supervisors. It admitted that the former was probably less likely at this stage.
But the Rome G7 will have little time for that, given the focus on "macro measures": how much fiscal stimulus is needed to fight recession and, of rising importance, what governments should do to restore confidence and lending by banks still hoarding billions in toxic assets.
German deputy finance minister Joerg Asmussen on Wednesday joined the growing number of officials saying the G7 is also going to have to focus on fears of mounting protectionism, and presumably seek a convincing way of committing to fight it. (Writing by Brian Love; editing by Patrick Graham)