This letter from the FSB Chair to the G20 Finance Ministers and Central Bank Governors ahead of their meeting in Baden-Baden from 17-18 March highlights the good progress made in implementing the post-crisis reforms, as a result of which the global financial system is moving from a state of fragility to greater resilience.

As implementation progresses, the FSB and the standard-setting bodies are increasingly turning to post-implementation evaluation of the effects of reforms, to address gaps and any material unintended consequences, standing ready to adjust reforms where needed, without compromising on their objectives.

With the benefits of the reforms beginning to be realised, the FSB Chair warns against the risk of a loss of momentum in completing and fully implementing essential international standards. He flags the risk that this could pose to the maintenance of an open global financial system, noting that a fragmentation of funding and liquidity markets would reduce the availability and raise the costs of finance to the real economy across all economies.

The letter outlines the FSB priorities under the German G20 Presidency which are:

  1. Transforming shadow banking into resilient market-based finance, including by addressing structural vulnerabilities in asset management;
  2. Making derivatives markets safer by progressing the post-crisis reforms to over-the-counter derivatives markets and delivering coordinated guidance on central counterparty resilience, recovery and resolution;
  3. Supporting full and consistent implementation of post-crisis reforms, including the development of a structured framework for post-implementation evaluation of the effects of reforms; and
  4. Addressing new and emerging vulnerabilities, including misconduct risks, as well as those stemming from the decline in correspondent banking and from climate-related financial risks.