The Financial Stability Board (FSB) has published a thematic peer review report on supervisory frameworks and approaches for systemically important banks.
The report examines how authorities are interpreting and implementing the recommendations from the FSB’s supervisory intensity and effectiveness group. It assesses progress towards enhancing supervisory frameworks and approaches for systemically important banks since the financial crisis, in particular for global systemically important banks (G-SIBs). The findings from the thematic review, which was conducted in close consultation with the Basel Committee on Banking Supervision, are based on questionnaire responses from, and follow-up discussions with, supervisory authorities from home jurisdictions of G-SIBs and a selected sample of G-SIBs.
The review found that all surveyed national authorities have taken significant steps to enhance supervisory effectiveness, within the context of their legal and institutional frameworks and in response to the supervisory failures revealed by the financial crisis. However, the review also found that authorities have not moved at the same pace across all areas of change and place differing levels of importance on the range of tools being used. This in part reflects the different impacts from the financial crisis in various countries and different supervisory traditions.
The report also highlights a number of key outstanding challenges that need to be addressed in order to further progress supervisory effectiveness. These relate to the need for authorities to:
- establish and implement clear and transparent supervisory strategies and priorities against which supervisory effectiveness can be more objectively assessed;
- maintain high-level, constructive dialogue with institutions at a senior level to support supervisory judgement and risk assessment;
- ensure data requests effectively support a more detailed and informed approach to supervisory understanding of institutions’ key strategic choices and related risks and vulnerabilities;
- further enhance international supervisory cooperation, including by reassessing and clarifying the objectives to be achieved through supervisory colleges and other strategic supervisory discussions on global institutions; and
- effectively manage the volume of regulatory and supervisory change, including by having sufficient budgetary resources and building and maintaining a skilled, capable, and experienced workforce.