Liquidity Preparedness for Margin and Collateral Calls: Final report

| PDF full text (529 KB)

Whilst margin and collateral calls are a necessary protection against counterparty risk, they can also amplify the demand for liquidity by market participants if they are unexpected in times of stress and affect a large enough part of the market.

Recent episodes of market stress, including the March 2020 market turmoil, the Archegos failure in March 2021, the 2022 turmoil in certain commodities markets, and the September 2022 issues experienced by many pooled liability-driven investment funds, underscore the importance of margin and collateral calls to financial stability. During these episodes the sudden increases in margin and collateral requirements were sometimes significant in scale and frequency, stretching some market participants’ ability to manage the associated liquidity risks.

These events illustrate that whilst margin and collateral calls are a protection against counterparty risk, they can also amplify the demands for liquidity across markets and market participants if they are unexpected in times of stress and affect a large enough part of the market. The increase in margin and collateral calls can impact market participants differently depending on the size of their positions and level of liquidity preparedness. This highlights the need for market participants to be well prepared to meet these calls.

This report sets out steps to enhance the liquidity preparedness of non-bank market participants for margin and collateral calls in centrally and non-centrally cleared derivatives and securities markets. It forms part of the FSB’s work programme on NBFI.

FSB policy recommendations

Liquidity risk management practices and governance

Recommendation 1: Market participants should incorporate the assessment of liquidity risks arising from margin and collateral calls in their liquidity risk management and governance frameworks.

Recommendation 2: Market participants should define their tolerance for liquidity risk arising from margin and collateral calls and establish contingency funding plans to ensure that liquidity needs arising from these calls can be met, including under extreme but plausible stressed conditions.

Recommendation 3: Market participants should regularly review and update their liquidity risk framework to ensure that liquidity risks arising from margin and collateral calls are robustly managed and mitigated, particularly under extreme but plausible stress scenarios.

Liquidity stress testing and scenario design

Recommendation 4: Market participants should conduct liquidity stress tests to identify sources of potential liquidity strains caused by margin and collateral calls, and to ensure a level of resilience consistent with their established liquidity risk tolerance. The stress test results should be used to calibrate adequate, diverse, and reliable sources of liquidity and collateral arrangements.

Recommendation 5: Robust stress testing should analyse a range of extreme but plausible liquidity stresses caused by changes in margin and collateral calls, as well as market participants’ overall liquidity position.

Collateral management practices

Recommendation 6: Market participants should have resilient and effective operational processes and collateral management practices.

Recommendation 7: Market participants should maintain sufficient levels of cash and readily available as well as diverse liquid assets and establish appropriate collateral arrangements to meet margin and collateral calls.

Recommendation 8: Market participants should have active, transparent, and regular interactions with their counterparties and third-party service providers in collateralised transactions to ensure adequate operational resilience with respect to spikes in margin and collateral calls under stressed conditions.

Liquidity Preparedness for Margin and Collateral Calls: Overview of responses to the consultation

| PDF full text (160 KB)

On 17 April 2024, the FSB published a consultation report with policy recommendations aimed at enhancing liquidity preparedness for margin and collateral calls among non-bank market participants.

The FSB received 25 responses to the consultation, which ended on 18 June 2024. Respondents included a broad range of market participants including trade associations, which represent a diverse range of sectors including global financial institutions, asset management, insurance, securities exchanges, derivatives markets, money market funds, hedge funds, alternative investments, and energy commodity trading. In addition, responses were received from regulated financial institutions, commodities firms, and others.

This note presents a summary of the responses received and changes made in response to those comments.

FSB issues policy recommendations to enhance non-bank market participants’ preparedness for margin and collateral calls

Press enquiries:
+41 61 280 8477
[email protected]
Ref: 36/2024

  • Policy recommendations aim to enhance the liquidity preparedness of non-bank market participants for margin and collateral calls in centrally and non-centrally cleared derivatives and securities markets.
  • Recommendations follow public consultation and focus on liquidity risks arising from spikes in margin and collateral calls, including during times of market-wide stress.
  • Recommendations cover liquidity risk management and governance, stress testing and scenario design, and collateral management practices of non-bank market participants.

The Financial Stability Board (FSB) today published policy recommendations to enhance the liquidity preparedness of non-bank market participants for margin and collateral calls in centrally and non-centrally cleared derivatives and securities markets (including securities financing such as repo).

The recommendations respond to calls for regulatory adjustments to deal with liquidity strains in the non-bank financial intermediation (NBFI) sector arising from spikes in margin and collateral calls during market stress. The recommendations are intended to build on and complement rules and regulations for liquidity risk management and governance that already exist in many sectors and jurisdictions.

Derivatives and securities activities can expose market participants to margin and collateral calls. Recent episodes of market stress, including the March 2020 market turmoil, the Archegos failure in March 2021, the 2022 turmoil in certain commodities markets, and the September 2022 issues experienced by many pooled liability-driven investment (LDI) funds, underscore the importance of margin and collateral calls to financial stability and the need for market participants to be prepared to meet these calls.

The FSB’s eight policy recommendations cover liquidity risk management and governance, stress testing and scenario design, and collateral management practices of non-bank market participants, focussing on liquidity risks arising from spikes in margin and collateral calls  during times of market-wide stress. The recommendations cover both centrally and non-centrally cleared derivatives and securities markets and apply to a broad range of non-bank market participants that may face margin and collateral calls, including insurance companies, pension funds, hedge funds, other investment funds, and family offices.

Non-financial entities such as commodities traders can also have material derivatives and securities exposures. While the recommendations do not directly apply to such entities, they and their counterparties could use the recommendations to improve their liquidity management and governance practices.

Notes to editors

This work forms part of the FSB’s work programme on enhancing the resilience of NBFI. It follows up on the findings of a review of margining practices conducted in 2022 by the Basel Committee on Banking Supervision (BCBS), Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO). The review recommended that the FSB undertake additional international work on enhancing liquidity preparedness of market participants and on regulatory data gaps, so that authorities can better monitor the NBFI sector’s liquidity preparedness.

The FSB launched a public consultation on its proposed recommendations to enhance the liquidity preparedness of non-bank market participants for margin and collateral calls during times of market-wide stress in April 2024. The overview of the responses to this consultation has also been published today.

Further details on the FSB’s work programme to enhance resilience in NBFI can be found in its latest progress report.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

FSB Sub-Saharan Africa Group discusses financial scams and fraud prevention, and crisis preparedness and resolution

Press enquiries:
+41 61 280 8477
[email protected]
Ref: 35/2024

The Financial Stability Board (FSB) Regional Consultative Group for Sub-Saharan Africa (RCG SSA) met on 6 December in Cape Town. The meeting was hosted by the South African Reserve Bank.

The meeting started with an overview of the FSB’s work programme for 2025 and its planned contributions to South Africa’s G20 Presidency. A key focus in 2025 will be on implementation of the FSB recommendations on crypto-assets and global stablecoins and on enhancing cross-border payments globally.

Participants exchanged views on global and regional vulnerabilities in the financial system, including perspectives on the financial stability outlook. They noted that long-standing vulnerabilities remain, such as high debt levels in governments, corporates and households. Particular attention was devoted to the challenges regional authorities face in monitoring risks from non-bank financial intermediation. In that respect, members looked forward to the forthcoming FSB Global monitoring report on non-bank financial intermediation for 2024.

An important area of concern is the increasing number of financial scams and fraud cases worldwide. Participants explored the scope for cross-border cooperation, including through the FSB and other international organisations, to protect investors and consumers from malicious online activities, ensure the proper functioning of capital markets and promote financial stability. They shared experiences on preventive and enforcement measures implemented in response to these disruptions and discussed the role that artificial intelligence (AI) can play in fraud detection and prevention.

Finally, members discussed crisis preparedness and resolution planning for financial institutions in light of the growing interconnectedness within the financial system. Members noted the need to be prepared for failures of banks beyond globally systemic important banks, as noted in the FSB’s recent statement on the importance of resolution planning and loss-absorbing capacity for banks which may be systemically significant or critical if they fail. Members further noted the increasing significance of regionally systemic banks and emphasised the need for African regulators to collaborate in crisis preparedness work. They also exchanged views on promoting cross-border cooperation and information sharing during crises, for example through crisis management groups, as set out in the FSB’s Key Attributes for Effective Resolution Regimes for Financial Institutions.

Notes to editors

The FSB Regional Consultative Group for Sub-Saharan Africa is co-chaired by Lesetja Kganyago, Governor, South African Reserve Bank and Denny Kalyalya, Governor, Bank of Zambia. Membership includes financial authorities from Angola, Botswana, Ghana, Kenya, Mauritius, Namibia, Nigeria, South Africa and Tanzania, as well as the Central Bank of West African States based in Senegal. Permanent observers include the Committee of Central Bank Governors of the Southern African Development Community, and the East African Community.

The FSB has six Regional Consultative Groups, established under the FSB Charter, to bring together financial authorities from FSB member and non-member countries to exchange views on vulnerabilities affecting financial systems and on initiatives to promote financial stability.1 Typically, each Regional Consultative Group meets twice each year.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

  1. The FSB Regional Consultative Groups cover the following regions: Americas, Asia, Commonwealth of Independent States, Europe, Middle East and North Africa, and sub-Saharan Africa. ↩︎

2024 Resolution Report: “From Lessons to Action: Enhancing Resolution Preparedness”

| PDF full text (813 KB)

The FSB is progressing work to address the remaining lessons for the resolution framework from the 2023 bank failures.

This report outlines the work the FSB is undertaking to address the remaining lessons for the resolution framework from the 2023 bank failures and to advance the resolution framework for insurers and central counterparties.

Ensuring an effective resolution framework for the banking sector has been a significant focus for the FSB. The bank failures in 2023 provided several lessons for resolution planning and for the broader elements of the crisis management framework for banks. The FSB is progressing work to address the remaining lessons for the resolution framework from the 2023 bank failures.

The FSB achieved important milestones advancing resolution framework development for other sectors of the financial system. The FSB finalised a new global standard to support the orderly resolution of a central counterparty. Moreover, the FSB is publishing a list of insurers subject to resolution planning standards consistent with the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions for the first time, as part of this report.

The FSB will continue monitoring implementation of global resolution standards.

FSB details advances in global resolution regimes and unveils a list of insurers subject to resolution planning standards

Press enquiries:
+41 61 280 8477
[email protected]
Ref: 34/2024

  • List of insurers subject to resolution planning standards published in the FSB’s Resolution Report, with thirteen insurers on this first annual list.
  • List of central counterparties (CCPs) that are systemically important in more than one jurisdiction has been expanded to fourteen from its last update in 2022, with the addition of ASX Clear (Futures) in Australia.
  • Resolution Report also outlines work the FSB is undertaking to address remaining lessons for the resolution framework from the 2023 bank failures.

The Financial Stability Board (FSB) today published its 2024 Resolution Report. The report takes stock of the FSB resolution-related work of the past year as well as of the progress made by FSB members in implementing resolution reforms and enhancing resolvability across the banking, financial market infrastructure, and insurance sectors. It also sets out the FSB’s 2025 priorities in the resolution area.

In 2024, the FSB focused on advancing the work to explore and address the lessons from the 2023 bank failures. This included work on public sector backstop funding mechanisms, operationalisation of bail-in, and assessing the impact of technological innovation on resolution processes. In the coming year, the FSB will continue to address these areas further and also explore practices of authorities using transfer tools in resolution (e.g. sales of asset portfolios); and promote cross-border cooperation and information sharing with authorities outside of Crisis Management Groups.

The FSB achieved important milestones advancing resolution framework development for other sectors of the financial system. The FSB finalised a new global standard to support the orderly resolution of a CCP. The standard aims to ensure that transparently calibrated resolution resources are available to achieve the orderly resolution of a CCP. In addition, ASX Clear (Futures) in Australia has been added to the list of CCPs that are systemically important in more than one jurisdiction.

The FSB is also publishing for the first time a list of insurers reported by FSB member authorities as being subject to resolution planning standards consistent with the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions. In the coming year, the FSB will work on promoting consistency in the scope of application of resolution planning standards for insurers.

Notes to editors

The Resolution Report has been prepared by the FSB Resolution Steering Group (ReSG), which is the primary global forum for the development of global standards and guidance for resolution regimes, and for recovery and resolution planning for systemically important financial institutions. ReSG is chaired by Martin J. Gruenberg, Chairman of the Board of Directors of the Federal Deposit Insurance Corporation.

In December 2022, the FSB announced that it would discontinue the annual identification of global systemically important insurers. It committed to publish annually a list of insurers reported by FSB member authorities as being subject to resolution planning standards consistent with the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions. The FSB has been closely coordinating with the IAIS on its resolvability monitoring and annual public reporting on the insurance sector and will continue to do so.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

FSB Plenary meets in Hong Kong

Press enquiries:
+41 61 280 8477
[email protected]
Ref: 33/2024

The Financial Stability Board (FSB) Plenary met yesterday and today in Hong Kong. Members discussed the outlook for global financial stability, including issues of particular relevance to emerging market and developing economies (EMDEs). The Plenary also reviewed policy work in several areas, including climate-related financial risks, crypto-assets and global stablecoins, cross-border payments, and non-bank financial intermediation (NBFI).

Members also agreed on the FSB’s work programme for 2025, confirmed the extension of Klaas Knot’s term as FSB Chair until 1 July 2025, and discussed the process for selection of a new FSB Chair.

Financial stability outlook

Long-standing vulnerabilities in the financial system remain. The global economy and financial system continue to be affected by economic and financial conditions, policy uncertainty, and geopolitical tensions. Globally, asset valuations remain elevated, while the heightened market volatility in early August suggests they are susceptible to further shocks.

Members discussed a number of issues, including the combination of high private and public debt and large bank holdings of domestic government bonds in some jurisdictions, which may lead to greater transmission of shocks between sovereigns and banks. Changing investor expectations about interest rates or geopolitical tensions could also spark market and capital flow volatility. Members also discussed recent developments in crypto-asset markets and global stablecoins, and the FSB’s work in this area.

Climate-related financial risks

The FSB supports international coordination of work to address financial risks from climate change through its Roadmap for Addressing Climate-related Financial Risks. The Plenary discussed progress in the four areas of the Roadmap as well as EMDE-specific climate vulnerabilities and ways to help address those vulnerabilities. Members stressed the importance of continued external engagement and coordination with international bodies on climate-related financial risks. The FSB will issue its next report on progress with the Roadmap in mid-2025.

Cross-border payments

In October 2022, the FSB published a prioritisation plan and engagement model for taking the G20 Roadmap for Enhancing Cross-Border Payments forward. It followed up, in 2023, by setting out priority actions for achieving the G20 goals for cheaper, faster, more transparent, and more accessible cross-border payments. While more than half of the priority actions have been completed, the FSB’s latest Key Performance Indicators report suggests that the work done so far is not yet sufficient and that further efforts are needed to improve the user experience across all payments market segments. 

The Plenary discussed ongoing legal, regulatory, and supervisory challenges and measures to address them, including the finalisation of the FSB’s recommendations to promote greater alignment and interoperability in data frameworks that apply to cross-border payments, and recommendations to strengthen the consistency in the regulation and supervision of banks and non-banks in their provision of cross-border payments services. The group discussed measures to promote their implementation, within and beyond the G20.

Non-bank financial intermediation (NBFI)

The FSB is continuing its substantial work programme to enhance the resilience of NBFI. As part of this, the FSB will shortly publish its final policy recommendations on measures to enhance liquidity preparedness of non-bank market participants for margin and collateral calls and will be launching a consultation on proposed policy recommendations to monitor and address financial stability risks from NBFI leverage. Data issues are hampering efforts to further improve the ability of authorities to effectively assess vulnerabilities stemming from the non-bank sector and to calibrate appropriate policies. The Plenary agreed to steps for how to overcome these challenges.

Implementation of resolution reforms

Members discussed progress in addressing the lessons learnt for resolution from the 2023 banking turmoil and key resolution work priorities for 2025. The Plenary agreed on the list of insurers subject to the resolution planning standards of the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions.

FSB work programme

The Plenary discussed the FSB’s work programme for 2025, including deliverables to South Africa’s G20 Presidency. In addition to advancing work on NBFI, crypto-assets and global stablecoins, artificial intelligence, cyber and operational resilience, cross-border payments, climate-related financial risks, and resolution, members stressed the importance of policy implementation and the role the FSB could take in promoting this. The finalised work programme will be published in early 2025.

Notes to editors

The FSB Chair is selected from representatives on the Plenary and appointed by the Plenary for a term of three years renewable once. Klaas Knot’s first term as FSB Chair ends on 1 December 2024. His term has been extended to 30 June 2025, when his term as President of De Nederlandsche Bank ends.

The process for appointing the FSB’s Chair is set out in the FSB’s Procedural Guidelines and the Charter.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

FSB notes significant progress in strengthening the regulation and supervision of investment funds in Brazil

Press enquiries:
+41 61 280 8477
[email protected]
Ref: 32/2024

  • Peer review finds Brazilian authorities have taken significant steps to strengthen the regulation and supervision of investment funds.
  • Review recommends further work to improve authorities’ ability to monitor vulnerabilities associated with investment funds’ activities.

The Financial Stability Board (FSB) today published its Peer Review of Brazil. The review follows up on the findings and recommendations from Brazil’s first FSB peer review in 2017 and examines subsequent developments in: authorities’ approach to monitoring vulnerabilities in investment funds; regulatory and supervisory measures to manage identified vulnerabilities and the linkages with banks; and institutional arrangements for supervising investment funds in Brazil.

The review finds that Brazilian authorities have taken significant steps to modernise and strengthen the regulation and supervision of investment funds. Measures have been introduced to limit leverage and expand the availability of tools for the management of liquidity.

The review notes further steps can be taken to continue to improve authorities’ ability to monitor vulnerabilities associated with investment funds’ activities. This includes continuing to enhance the system-wide monitoring of financial stability risks and market developments that may affect leverage and liquidity mismatch and updating the regulatory framework as appropriate.   

Ryozo Himino, Chair of the FSB’s Standing Committee on Standards Implementation (SCSI) that oversaw the preparation of the peer review said: “The introduction of the new regulation for the investment funds sector is timely given the growth and importance of the sector to Brazil. The Brazilian authorities have made significant progress since the last FSB peer review to strengthen the regulation concerning leverage and liquidity risks. This report provides a reference point to other jurisdictions with similar challenges.”  

Notes to editors

FSB member jurisdictions have committed to undergo periodic peer reviews to evaluate their adherence to international financial standards. To fulfil this responsibility, the FSB has established a regular programme of country and thematic peer reviews of its member jurisdictions. As part of this commitment, Brazil volunteered to undergo a peer review in 2023-2024.

The peer review report was prepared by a team of experts from FSB member institutions and chaired by María José Gómez Yubero from Spain’s Comisión Nacional del Mercado de Valores. The analysis and conclusions of this peer review are based on the responses to a questionnaire by financial authorities in Brazil and reflect information on the progress of relevant reforms as of July 2024. The review has also benefited from dialogue with the Brazilian authorities as well as discussion in the FSB’s Standing Committee on Standards Implementation.

A schedule of country peer reviews, as well as all completed peer review reports, are available on the FSB website.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups. The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

Peer Review of Brazil

| PDF full text (786 KB)

Brazil’s investment funds sector is a significant part of the country’s financial system. Brazilian authorities have taken important steps to modernise the sector and to improve its regulation and supervision.

This 2024 FSB Peer Review of Brazil looks at the country’s regulation and supervision of investment funds, including by following up on the findings and recommendations from Brazil’s first FSB peer review in 2017. The latest review looks at authorities’ approach to monitoring and addressing vulnerabilities and at institutional arrangements for supervising investment funds in Brazil.

The review finds that Brazilian authorities have taken significant steps to strengthen the regulation and supervision of investment funds and have largely addressed the recommendations from the 2017 peer review.

Notwithstanding this progress, there is room for further work to improve authorities’ ability to monitor vulnerabilities associated to investment funds’ activities.

Working for Financial Stability in an Interconnected World

Speech by Martin Moloney, Deputy Secretary General of the Financial Stability Board, at the High Level Regional Symposium on Financial Stability in Rabat

The views expressed in these remarks are those of the speaker and do not necessarily reflect those of the FSB or its members.

Governor, many thanks for your invitation to this important symposium. I look forward to our discussions on the vital topics that are on our agenda today.

The way you have structured the agenda and your initiative in inviting speakers such as myself from global standard setting bodies indicates strongly your understanding of the inter-connectedness between us all. Financial stability is a pre-condition of all our hopes and plans to improve the prosperity of our populations and build for the future. The risks to the stability of the financial system are complex. The degree of uncertainty we all face in trying to assess those risks is high. Understanding that those risks are closely related to the inter-connectedness between us is crucial.

In a sense all our work on financial stability is about adopting a prudent common sense in how we make use of the financial system. In a simpler world, we might have done that separately, each jurisdiction taking care of their own financial system and each jurisdiction either reaping the long term benefits of its prudence or paying the price for imprudence. That is not an option for any of us any more. We all have to recognize that what happens in, for example, US financial markets can impact the prosperity of people in Asian economies. What happens in Africa can impact on the prosperity of people in Europe and vice versa. 

We have long since opened the path for trade, commerce and finance to be conducted on an increasingly global basis. Supply lines and financing packages link us to each other across the globe. The losses faced by one can very quickly become the losses faced by all.

As recently as last August we saw a significant shock to the financial markets in Japan, but what was telling was that it impacted across the globe. Thankfully it did not last. The system stabilised. People adjusted their portfolios and as prices adjusted market participants had the liquid assets needed to meet the margin calls that the price movements triggered. This is the good news. But it reminded us, if we needed reminding, of our interconnectedness. A farmer in rural Morocco and a trader on Wall Street are connected by the invisible stands of the global economy.

It is tempting some times to think that that is not the case. Just as it is tempting sometimes to wish it were not the case. But we should recall firmly both the opportunities that arise from our interconnectedness and the risks that are unavoidably associated with having such a complex inter-connected global system.

Our organisation has been established to monitor the vulnerabilities that are inherent in the financial system and to call out bravely when we see that action must be taken. Our role is also to coordinate the development of polices by our members to manage those vulnerabilities without the opportunities inherent in the financial system being lost. We require your cooperation and support to make that work.

I am just back from the G20 meeting in Brazil. In Azerbaijan, COP 29 discussions closed over the weekend. All around we see intensive efforts to manage our complex global economy so that it creates benefits for people in their daily lives. There was a palpable sense of purpose in Brazil to fight hunger and poverty just as, at every COP, there is a deeply honest engagement by so many with the planetary climate issues we all face. But in neither place can you get away from the immensity of the tasks we face in trying to be our best selves and to coordinate globally.

I don’t want to avoid acknowledging, either, that the task we all face in trying to keep the financial system stable is immensely difficult. At the FSB we have issued 28 substantial reports over the last 12 months on a whole range of issues that must be tackled for the financial system to remain stable.  Frankly, this is not exceptional. Every year we must work constantly on emerging issues like climate and technological innovation, we must revisit exiting regulatory frameworks to improve them in light of events and we must monitor what jurisdictions are doing to encourage responsible behaviour.

And it is not only us. Each of the global standard setting bodies, the Basel Committee, the IAIS represented here, IOSCO represented here and the CPMI have to work without pause to support the stability of the financial system.

And in everything we do, we have to keep in mind the concerns of all our members, not least the distinct issues facing emerging economies. I hope and I am sure that in the panel discussion we are about to have we will have an opportunity to highlight those distinctive issues facing emerging economies.

You might be a little sceptical as to whether I mean that. You might suspect that I would think that if I can keep the major global markets and global banks stable the system will be stable. But that is not the case. I have just emphasised the importance of our inter-connectedness. But that connectedness works both ways. We all need emerging economies to be able to grow and develop in a stable way because the shocks that can destabilise the global economy can start anywhere. The risks that can turn into amplifying chains of events that cause us all to lose out through a crisis can build up anywhere. When emerging economies face what has been called a silent debt crisis, the world economy faces a threat. When emerging economies are prosperous and well managed, the whole global economy is better set on course towards prosperity.

After this event, I will make my way to the plenary meeting of the FSB where we will review the overall vulnerabilities in the system and set our work for next year. Bound into all those discussions, is our continuing focus on emerging economies.

One of the areas that the FSB works on that directly relates to emerging economies is our work to develop the cross border payments services around the world that no one relies on more than those who send remittances back home. We have been working on this challenging area for some years. We have made very good progress on a whole range of policy issues that might get in the way of efficient, transparent, low cost payment services for all. Despite the success of our work in getting rid of those obstacles we continue to see those seeking to make payments across borders having to live with services that are too slow, that are too expensive and that are not sufficiently transparent.

This work is proving difficult. Perhaps that is not surprising. Perhaps no one should ever have expected that the system would just quickly improve. Like so much else in the global financial system, payments services are complex when they start to operate across borders. There are a whole range of complexities that influence the quality of service users get. Sanctions screening, money laundering controls, capital controls, differences in technical standards limitations on competition.

The situation here in Africa is particularly concerning. 

Fundamentally, we can do better. The fast payments systems that have been introduced in many countries show that we can do better. But getting those systems to work together across borders is difficult.

We have published results this year that show limited improvement in the user experiences. But we are determined that we will go on with the work. We will do what is necessary to make the payments system work better.

As we have carried through the work we have promised to do, we have inevitably uncovered additional complications. We are engaging with data regulators. We are engaging with the private sector intensively. The OECD, the World Bank and the IMF are joining us in this work, as is FATF. And of course, the CPMI is our close partner in this work.

It should be no surprise that this has proven difficult. It should, I hope, come as no surprise that we are determined to continue this work. We have a lot of experience in bringing in complex reforms sometimes in the face of sceptical voices.

Sustainable, fair, low cost, transparent payment services across the globe serves us all. It shines a light on the benefits of our interconnectedness and helps those benefits to be shared with those who have stayed behind.

I give this as one example of the sense of conscious awareness of our social obligations with which the FSB and its members do their work. I look forward today to our discussions on financial stability. I again thank the organisers of this conference who help us to do our job with initiatives such as this.

Thank you.