On 25 June 2019, the Financial Stability Board (FSB) published its chair’s letter to G20 leaders ahead of their summit in Osaka on 28-29 June, together with a progress report on implementation of the G20 financial regulatory reforms.

The letter sets out a number of key themes: addressing new and emerging vulnerabilities; harnessing the benefits of financial innovation while containing risks; completing implementation of the agreed reforms and ensuring that the reforms work as intended; promoting an integrated global financial system; and strengthening the FSB’s outreach and accountability.

In relation to addressing new and emerging vulnerabilities, the letter notes that:

• corporate and public debt levels have continued to rise. One particular issue is the extent to which financial institutions are exposed to riskier credit instruments, including leveraged loans, directly and through collateralised loan obligations; and
• the assessment of vulnerabilities also need to consider structural changes in the financial system. This includes the continued shift of financial intermediation to non-banks, which now account for almost half of global financial assets.