The Financial Stability Board (FSB) has published a letter that its chairman, Mark Carney, sent to G20 Finance Ministers and Central Bank Governors ahead of their meeting in Baden-Baden on 17-18 March 2017.
In his letter, Mr Carney highlights the good progress made in implementing post-crisis reforms, as a result of which the global financial system is moving from a state of fragility to greater resilience. As implementation progresses, the FSB and the standard-setting bodies are increasingly turning to post-implementation evaluation of the effects of the reforms in order to address gaps and any material unintended consequences.
With the benefits of the reforms beginning to be realised, Mr Carney warns against the risk of a loss of momentum in completing and fully implementing essential international standards. Therefore in the letter Mr Carney sets out certain deliverables which include Finance Ministers and Central Bank Governors being asked to endorse the FSB’s January 2017 policy recommendations to address the risks around asset management activities, completing the job of transforming shadow banking into more resilient market-based finance. In particular, by the Hamburg summit (7 – 8 July 2017) the FSB will report on its assessment of the evolution of shadow banking activities since the financial crisis and related financial stability risks, and whether the policies and monitoring put in place since then adequately address the risks.
In terms of deliverables, the FSB will:
- report on its review of the over-the-counter derivatives markets reforms;
- publish final guidance on central counterparty resolution and the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions will co-publish final guidance on resilience and recovery;
- finalise guidance on internal total loss-absorbing capacity;
- publish its third Annual Report on implementation and effects of G20 financial regulatory reforms, and the framework for post-implementation policy evaluation of the effects of those reforms;
- deliver to G20 leaders a report drawing together actions taken and recommendations made to address misconduct risk. A consultation paper on the use of compensation tools to address misconduct will also be published;
- report on next steps under its correspondent banking action plan; and
- publish a report on the financial stability implications of FinTech.
View FSB priorities for G20 German Presidency, 10 March 2017