Effective Resolution Regimes and Policies – Implementation
The FSB has designated resolution regimes as one of the priority areas for implementation monitoring. The task of regular monitoring and reporting in this area is carried out by the FSB Resolution Steering Group (ReSG) and its subgroups, such as the Cross-Border Crisis Management (CBCM) groups for banks, insurers and financial market infrastructures. Their activities include monitoring progress and promoting the effective implementation in substance and scope of the Key Attributes of Effective Resolution regimes in the bank and non-bank financial sectors.
The FSB published in November 2018 its fourth annual report on the implementation and effects of the G20 financial regulatory reforms. Below is an extract from this report on the status of implementation of resolution-related reforms.
Implementation of the policy framework for G-SIFIs has advanced the most for G-SIBs.
Implementation of the TLAC Standard is ongoing. In most G-SIB home jurisdictions external TLAC requirements have been finalised (Canada, Switzerland, the UK and the US) or are close to being finalised (Banking Union, Japan).1 However, implementation of internal TLAC is less advanced and approaches to internal TLAC distribution and calibration differ among G-SIB hosts. Furthermore, few jurisdictions have introduced the BCBS requirements on cross-holdings of other G-SIBs’ TLAC or specific disclosure requirements for TLAC.
Substantial work remains in achieving effective resolution regimes and operationalising plans for systemically important banks and non-bank financial institutions (Graph 4).
Almost all G-SIB home and key host jurisdictions have in place comprehensive bank resolution regimes that align with the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions. However, implementation of the Key Attributes is still incomplete in some FSB jurisdictions. The powers most often lacking are bail-in (14 jurisdictions) and to impose a temporary stay on the exercise of early termination rights (9 jurisdictions). Reforms underway in several FSB jurisdictions address some, but not all, of these gaps.
Crisis Management Groups (CMGs) have been established, and resolution strategies and operational resolution plans adopted, for all G-SIBs. Despite the very substantial progress, important technical and operational aspects need to be addressed to make sure that resolution plans can be executed effectively. In addition, institution-specific cross-border cooperation agreements (CoAgs) are still not in place for some G-SIBs.2
Implementation of resolution reforms is less advanced in the insurance sector. The majority of FSB jurisdictions do not have in place comprehensive insurance resolution regimes that are aligned with the Key Attributes, and lack powers and tools needed to operationalise resolution plans.
Most jurisdictions do not yet have in place a comprehensive resolution regime for CCPs. Over the past year authorities began to establish CMGs for 13 CCPs identified as systemically important in more than one jurisdiction.3 CMGs and institution-specific CoAgs are not yet in place for all 13 CCPs and resolution planning for CCPs is still at an early stage.
Status of implementation
For further information, see the latest FSB resolution progress report (as of November 2018).
1 Firms that are currently headquartered in an emerging market economy and designated as G-SIBs will comply with the minimum TLAC requirements starting from 2025.↩
2 See the FSB Seventh Report on the implementation of resolution reforms (November 2018).↩
3 These CCPs were reported as systemically important in more than one jurisdiction by agreement between home and host authorities on the basis of a set of criteria set out in the FSB Guidance on CCP Resolution and Resolution Planning.↩