On 13 November 2020, the Financial Stability Board (FSB) published its 2020 report on the implementation and effects of the G20 financial regulatory reforms.
Key points in the report include:
- Greater resilience of major banks at the core of the financial system has allowed the system largely to absorb, rather than amplify, the macroeconomic shock of the COVID-19 pandemic.
- The large majority of regulatory and supervisory measures introduced by authorities made use of the flexibility built into existing international standards, though there have been a few instances where individual temporary measures went beyond this flexibility.
- Substantial work remains to operationalise resolution plans for systemically important banks and implement effective resolution regimes for insurers and central counterparties (CCPs). Work is also ongoing at the international level to enhance CCP resilience, recovery and resolution, and to make trade reporting truly effective. The implementation of non-bank financial intermediation reforms continues but it is at an earlier stage than other reforms.
- The question of whether the flexibility provided by authorities is actually used by financial institutions – for example, in the case of bank capital and liquidity buffers – may require particular attention and will inform discussions of future policy adjustments, including on the eventual exit from temporary measures.
- The COVID-19 pandemic has demonstrated once again how interconnected the global financial system is. Maintaining close cooperation is critical given the uncertainty about the pandemic, and necessary for the full, timely and consistent implementation of the G20 financial regulator reforms, which will help to further strengthen the resilience of the financial system.