On 9 April 2019, the Financial Stability Board (FSB) published a letter from its Chair to the G20 Finance Ministers and Central Bank Governors. The letter comes ahead of the G20 meeting of 11 – 12 April 2019.

Key points in the letter include:

  • addressing new and emerging vulnerabilities in the financial system– the FSB will continue to scan the horizon to identify and assess emerging risks. Whilst resilience in the financial system has improved generally, potential vulnerabilities in the financial system persist, and in some cases have built up further. Loosening lending standards, elevated asset values, and high corporate and public debt call for particular vigilance;
  • a disruptive Brexit could represent an adverse macroeconomic shock, which could be accompanied by significant market volatility. The FSB is monitoring developments and if necessary will advise G20 Ministers and Governors on risks, should they crystallize;
  • as regards policies addressed to ending “too-big-to-fail”, the FSB will continue its work on technical and operational issues that arise in resolution and will address issues relating to systemic risk in central counterparties (CCPs). In 2019, the FSB will work on providing additional guidance on the adequacy of financial resources for CCPs to support resolution and the treatment of CCP equity in resolution. This work will be completed in 2020; and
  • in 2019, the FSB will be finalizing governance arrangements for the unique transaction identifier (UTI) and unique product identifier (UPI) and expects to identify one or more UPI service providers by mid-2019. This would prepare the FSB for consideration in 2020 of the potential development of a global aggregation mechanism for trade reporting.