FSB Chair’s letter to G20 Leaders - building a safer, simpler and fairer financial system
Available as: PDF3 July 2017
This letter from the FSB Chair to G20 Leaders ahead of their Summit in Hamburg from 7-8 July sets out four main points:
- G20 reforms are building a safer, simpler, fairer financial system. Banks are considerably stronger, more liquid and more focused. A series of measures is eliminating the toxic forms of shadow banking and transforming it into resilient market-based finance. Reforms to the over-the-counter (OTC) derivatives markets are replacing a complex and dangerous web of exposures with a more transparent and robust system. The greater resilience is being achieved without impeding the supply of credit to the real economy.
- Some unfinished business to finalise and implement reforms merits attention. Basel III must be completed urgently and then implemented faithfully. FSB policies to address structural vulnerabilities associated with asset management activities were finalised in January and operationalisation is underway. Further work is required to build effective cross-border resolution regimes, and to realise fully the benefits of trade reporting in improving transparency in OTC derivatives markets. The underlying causes of misconduct are being addressed by bolstering individual responsibility accountability and better aligning incentives and reward, but more needs to be done.
- The financial system is evolving, so the FSB will continue to scan the horizon to identify, assess and address new and emerging risks to financial stability. The FSB is monitoring financial stability issues raised by FinTech, and addressing the decline in correspondent banking relationships that can threaten financial inclusion. The Task Force on Climate-related Financial Disclosures will continue to work over the course of the next year to promote and monitor adoption of its recommendations.
- G20 countries now have a strategic opportunity to build on this foundation to create an open, global financial system. Doing so would further support the cross-border investment needed for strong, sustainable and balanced growth across the G20.