Summary of document history
To remain effective, regulatory and supervisory frameworks must keep pace with the dynamic financial sector and be forward-looking and adaptive to current and future material risks.
Many financial authorities in FSB member jurisdictions have been reviewing their regulatory and supervisory frameworks to pursue various objectives, including evaluating whether they facilitate sustainable economic growth and remain forward-looking and adaptive to current and future material risks.
While existing frameworks appear to have been successful in addressing vulnerabilities exposed by the Global Financial Crisis and in supporting the real economy, they must adapt and respond to new vulnerabilities, technologies, offerings, and economic conditions to remain effective. Responsible governance also calls on financial authorities to address any inefficiencies or unintended consequences of such frameworks, without reducing resilience.
In this context, the FSB is proposing eight high-level principles for modernisation, addressed to financial authorities. The principles are subject to four important understandings: (1) financial stability provides the foundation for sustainable economic growth, which in turn supports financial stability; (2) the principles build on the commitment to implement internationally agreed standards; (3) implementation of the principles must be consistent with jurisdictions’ legal frameworks and circumstances; and (4) the principles aim to preserve or enhance existing levels of financial system resilience.
This consultation report responds to a request of the US G20 Presidency. It is informed by a stocktake of modernisation efforts already underway or completed by FSB members and a symposium hosted by the FSB on proportionality/tailoring and impact analysis.
Questions for consultation
- The proposed principles acknowledge the goal of improving the effectiveness, efficiency, risk focus, coherence, and forward-looking nature of regulatory and supervisory frameworks. Do you agree with these aims? Should there be others?
- Are the proposed principles sufficiently comprehensive and clear to guide financial authorities’ modernisation of regulatory and supervisory frameworks? How could the proposed principles be clearer?
- Are the proposed principles sufficiently flexible to accommodate different legal systems, market structures, and evolving risks over time?
- Do the proposed principles adequately maintain or enhance existing levels of resilience?
- What are the anticipated benefits or risks of regulatory and supervisory modernisation? Provide evidence or case studies where possible.
- Would adding further case studies improve the usability of this report? If so, which proposed principles would benefit from additional case studies?
- How can communication around modernisation efforts be enhanced to avoid misperceptions (e.g., that modernisation compromises existing levels of resilience) among stakeholders, including the public?
- How could financial authorities modernise their regulatory and supervisory frameworks on an ongoing basis while ensuring sufficient predictability for financial institutions and the public?
- How could these proposed principles affect market participants?
- Does the preamble to the proposed principles set appropriate and sufficient parameters within which the proposed principles operate?
- How could financial authorities best prioritise among various risks on the basis of their materiality?
- How could financial authorities strike a balance between incorporating proportionality/tailoring and maintaining frameworks that are well-understood and easy for financial authorities to implement and administer?
- How could cliff effects for proportionality/tailoring be appropriately managed?
- How could financial authorities best harness the benefits of impact analysis and adequately disclose assumptions and limitations related to such analysis?
The FSB is inviting comments on this consultation report and the questions set out herein. Responses should be submitted via this secure online form by 8 January 2027.
Please contact the FSB by email ([email protected]) if you have questions or if you wish to provide supplemental material. Responses will be published on the FSB’s website unless respondents expressly request otherwise.
