FSB Chair’s letter to G20 Leaders - Building a resilient and open global financial system to support sustainable cross-border investment
This letter from the FSB Chair to G20 Leaders ahead of their summit in Hangzhou from 4-5 September sets out the progress in meeting the FSB’s 2016 priorities. The letter notes that:
First, the G20 reforms are working. The system is providing more reliable financial services and has proven resilient in the face of recent shocks. As implementation progresses, the financial sector is increasingly absorbing shocks rather than amplifying them.
Second, the financial system is changing to rely more on markets and less on banks. This is a major positive development but one that also raises new vulnerabilities. As a consequence, the support of Leaders will be needed to build on the substantial progress to promote resilient market-based finance and develop robust financial market infrastructure.
Third, the ongoing support of G20 Leaders is required to implement reforms fully, consistently and promptly. Our second Annual Report to the Summit describes progress, the effects of reforms and areas meriting ongoing attention. In particular, it underscores that continued focus is necessary to implement critical measures to end Too Big to Fail, to make derivatives markets safer, and to transform shadow banking into resilient market-based finance.
Fourth, developments in recent years raise the importance of new measures to support a more resilient, inclusive globalisation built on sustainable cross-border investment. These include initiatives to address the decline in correspondent banking relationships, improve climate-related financial disclosure, address financial sector misconduct and manage the financial stability implications of new financial technologies.
Alongside the Chair’s letter the FSB also published its second annual report on the Implementation and Effects of the G20 Financial Regulatory Reforms. The report describes progress by FSB jurisdictions in implementing regulatory reforms to fix the fault lines that led to the global financial crisis and build a safer, more resilient financial system. It concludes that implementation progress remains steady but uneven, and that the effects of the reforms implemented to date have been generally positive.