FSB seeks feedback on its proposals for quantitative targets for enhancing cross-border payments

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Ref no: 12/2021

The Financial Stability Board (FSB) today published a public consultation on global targets for addressing the four challenges of cross-border payments. The quantitative targets proposed are a foundational step in the G20 Roadmap for Enhancing Cross-border Payments, which was endorsed by G20 Leaders in November 2020.

The proposed targets set goals for improving cost, speed, transparency and access for cross-border payments in the coming years through the actions taken under the Roadmap. They will play an important role in defining the ambition of the work and creating accountability. They are intended to provide a common vision for the improvements that are being sought in cross-border payments services through the collaborative work of the private and public sectors. These targets are being set in an inclusive manner, including through this public consultation.

The proposed targets have been developed so that they are directly related to the challenges, provide a clear indication of the extent of progress, are appropriately ambitious, can be readily communicated, and are meaningful to a wide range of stakeholders. They are designed to be a small number of high-level, simple targets focused on end-users. Targets are proposed across three market segments: wholesale payments; retail payments (involving non-financial corporates or public sector entities as payers or receivers and person-to-person (P2P) payments other than remittances); and remittances.

The FSB proposes end-2027 as a common target date for achieving the individual targets, with the exception of the remittance cost target, where a 2030 date has already been set within the United Nations Sustainable Development Group Goal (UN SDG) and endorsed by the G20. Progress towards meeting the targets will be monitored and publicly reported over time.

The FSB is inviting comments on the proposed targets and the questions set out. By the time of the October final report setting the targets, the FSB will also develop an implementation approach for monitoring the targets that will set out:

  1. how targets will be measured and data sources and data gaps to be filled;

  2. how progress towards meeting the targets will be monitored; and

  3. the frequency of data collection and publication.

The public consultation period closes on Friday 16 July 2021. The final recommendations, taking on board feedback from the public consultation, will be delivered for endorsement at the G20 Summit in October 2021 and published.

Notes to editors

The G20 has made enhancing cross-border payments a priority. The FSB published the Roadmap for Enhancing Cross-border Payments in the form of 19 Building Blocks and related Actions. The Roadmap was developed by the FSB, in coordination with the Committee on Payments and Market Infrastructures (CPMI) and other relevant international organisations and standard-setting bodies.

The FSB established the Cross-border Payments Coordination Group Task Force on Targets, composed of senior FSB representatives, to develop a proposal for specific quantitative targets including target dates for a public consultation to be launched in May 2021.

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 Randal K. Quarles, Vice Chairman, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

FSB Europe group discusses global vulnerabilities and addressing risks related to money market funds and climate change

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Ref no: 11/2021

The Financial Stability Board (FSB) Regional Consultative Group (RCG) for Europe held a virtual meeting yesterday to discuss global and regional macroeconomic and financial market developments, and their potential impact on European economies.

The group exchanged views on financial stability issues during the recovery from the COVID-19 pandemic, including potential threats to regional financial stability arising from the pandemic. Members also discussed authorities’ considerations in exiting from temporary public support measures, when conditions allow.

The group discussed the most recent FSB initiatives to address climate-related risks to financial stability, including promoting consistent regulatory and supervisory approaches to climate risk and identifying gaps in data for monitoring financial stability. Members also discussed promoting greater uptake and consistency in national and regional climate-related disclosures, using the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations as the basis with respect to climate-related financial risks. Members were informed of the FSB’s ongoing work to develop a coordinated roadmap to address climate-related financial risks, which will be submitted to the G20 and published in July.

Members exchanged views on how to strengthen the resilience of money market funds (MMFs) and discussed the FSB’s policy work on assessing and addressing vulnerabilities in MMFs which is a part of the FSB’s overall work programme to strengthen the resilience of non-bank financial intermediation. Given the cross-border nature of MMFs, members discussed the best ways to coordinate regarding reforms to MMFs. Members were informed about the FSB’s upcoming public consultation on policy options for MMFs to be published ahead of the July G20 meetings.

The group also received an update on the FSB’s work programme, including planned deliverables to the G20 in 2021.

Notes to editors

The FSB RCG for Europe is co-chaired by Katharine Braddick, Director General, Financial Services at the UK Treasury and Henry Ohlsson, Deputy Governor, Sveriges Riksbank. Membership includes financial authorities from Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland, Ukraine, United Kingdom and the Group of International Finance Centre Supervisors. The European Commission, the European Central Bank, the ECB Banking Supervision and European Banking Authority also attended the meeting.

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 25 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 Randal K. Quarles, Vice Chairman, US Federal Reserve Board; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

  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. []

Application Paper on the Supervision of Climate-related Risks in the Insurance Sector

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The Paper provides insurance supervisors with concrete tools to further strengthen their efforts in assessing and addressing risks to the insurance sector from climate change. It also sets out recommendations and examples of good practice, consistent with the Insurance Core Principles (ICPs). With this publication, the IAIS and SIF aim to promote a globally consistent approach to the supervision of climate-related risks.

The Paper provides recommendations on the following topics:

  • Role of the supervisor: Supervisors should assess the relevance of climate-related risks to their supervisory objectives. They should collect quantitative and qualitative information on the insurance sector’s exposure to, and management of, physical, transition and liability risks of climate change.

  • Corporate governance: When addressing climate-related risks, it is expected that insurers integrate these risks into their overall corporate governance framework. For instance, the control functions (including the risk management and actuarial functions) should properly consider climate-related risks and have appropriate resources and expertise to manage them.

  • Risk management: Climate-related risks have the potential to impact all insurers; therefore, these risks should be considered for inclusion in the Own Risk and Solvency Assessment (ORSA). Likewise, it is expected that insurers adopt the appropriate risk management actions to mitigate any identified risks

  • Investment policy: Insurers should assess the impact from physical and transition risks on their investment portfolio, as well as on their asset-liability management. A forward-looking view, including the use of scenarios, may help insurers gain a better understanding of the risks.

  • Disclosures: Material risks associated with climate change should be disclosed by insurers, in line with ICP 20 (Public Disclosure).

FSB Commonwealth of Independent States (CIS) group discusses risks to financial stability

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Ref no: 10/2021

The Financial Stability Board (FSB) Regional Consultative Group (RCG) for the Commonwealth of Independent States (CIS) held a virtual meeting today.

Members had a productive discussion on a range of financial stability issues including:

  • The effects of COVID-19 and temporary support measures adopted by advanced economies on RCG CIS members’ economies.

  • The effectiveness of RCG CIS members’ respective support measures as well as the challenges in developing an exit strategy from these temporary measures when conditions allow.

  • Strategies for dealing with Environmental, Social and Governance (ESG) risks, including in assessing their impact on financial stability.

  • The potential adoption of national digital currencies, in both developed and emerging market economies, and their impact on financial stability.

  • The progress in phasing out of LIBOR and replacing it with alternative financial benchmarks.

The group also received an update on the FSB’s work programme, including planned deliverables to the G20 in 2021, and discussed how RCG CIS members could engage further with the FSB on areas of particular importance.

Notes to editors

The FSB RCG for the CIS is co-chaired by Alexey Moiseev, Deputy Finance Minister of the Russian Federation and Nerses Yeritsyan, Deputy Governor, Central Bank of Armenia. Membership of the RCG CIS comprises financial authorities from Armenia, Belarus, Kazakhstan, Kyrgyz Republic, Russia and Tajikistan.

This is the ninth meeting of the RCG for the CIS. The last meeting of the group was held on 11 December 2018 in Yerevan, Armenia.

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 25 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 Randal K. Quarles, Vice Chairman, US Federal Reserve Board; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

  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. []

FSB Asia group discusses risks to financial stability and regulatory and supervisory challenges arising from COVID-19

Press enquiries:
+41 61 280 8477
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Ref no: 9/2021

The Financial Stability Board (FSB) Regional Consultative Group (RCG) for Asia held a virtual meeting today to discuss vulnerabilities and financial stability issues affecting Asia and the impact of the COVID-19 pandemic on the region.

Members discussed global and regional macroeconomic and financial market developments, including risks to financial stability arising from the COVID-19 pandemic and the challenges in managing the recovery in an environment where an uneven pace of recovery across regions could have spillover effects to Asia. Members exchanged views on some of the preliminary lessons learnt from the pandemic, as well as the impact of the pandemic and ensuing policy support measures on corporate viability and debt servicing.

The group also discussed regulatory and supervisory challenges arising from the pandemic. Members acknowledged that the effective implementation of global standards had played a key role in supporting the strong starting positions of financial institutions going into this crisis. At the same time, many members have made or are considering adjustments to regulatory and supervisory approaches, such as stress testing methodologies, to safeguard financial system resilience.

The group received an update on the FSB’s work programme and the planned deliverables to the G20 in 2021. Members discussed areas of importance for RCG Asia member jurisdictions, such as the FSB’s work on US dollar funding and emerging market and developing economy vulnerabilities, and agreed the need for further engagement on this.

Notes to editors

The FSB RCG for Asia meeting was co-chaired by Benjamin E. Diokno, Governor, Bangko Sentral ng Pilipinas and M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India. Membership of the RCG for Asia comprises financial authorities from Australia, Brunei Darussalam, Cambodia, China, Hong Kong SAR, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

In preparation for the meeting, Governor Benjamin E. Diokno convened an informal meeting among non-FSB members of the RCG for Asia, to discuss evolving financial stability issues in the region.

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 25 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 Randal K. Quarles, Vice Chairman, US Federal Reserve Board; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

  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. []

FSB Americas group discusses global and regional vulnerabilities and COVID-19 support measures

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+41 61 280 8477
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Ref no: 8/2021

The Financial Stability Board (FSB) Regional Consultative Group (RCG) for the Americas held a virtual meeting today to discuss global and regional macroeconomic and financial market vulnerabilities and their potential impact on the region. Members discussed possible financial stability implications from the COVID-19 pandemic, including the impact of a more asynchronous recovery across regions and capital flows on emerging market and developing economies (EMDEs).

Members exchanged views on preliminary lessons learnt from COVID-19 and the effectiveness of policy support measures, in particular, potential spillover effects to EMDEs from policy measures taken by advanced economies. Members also discussed the implications of adjustments in, and the eventual withdrawal of, support measures once appropriate and their impact on cross-border banking, capital flows, and corporate sector debt.

The group received an update on the FSB’s work programme, including planned deliverables to the Italian G20 Presidency in 2021. Members discussed areas of importance for RCG Americas member jurisdictions, including work underway in the FSB to strengthen the resilience of non-bank financial intermediation; the FSB Roadmap for enhancing cross-border payments; transitioning away from LIBOR; strengthening cyber and operational resilience; and analysing and addressing climate-related financial risks.

Notes to editors

The FSB RCG for the Americas is co-chaired by Alejandro Díaz de León-Carrillo, Governor, Bank of Mexico and Cindy Scotland, Managing Director, Cayman Islands Monetary Authority. Membership includes financial authorities from Argentina, Bahamas, Barbados, Bermuda, Bolivia, Brazil, British Virgin Islands, Canada, Cayman Islands, Chile, Colombia, Costa Rica, Guatemala, Honduras, Jamaica, Mexico, Panama, Paraguay, Peru, Trinidad and Tobago, the United States of America and Uruguay.

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 stability1. 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.

The FSB is chaired by Randal K. Quarles, Vice Chairman, US Federal Reserve Board; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

  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. []

Call for papers: 2021 Annual Meeting of the Central Bank Research Association (CEBRA)

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The FSB invites academic paper submissions for a plenary session on the topic of ‘Interconnectedness, Bond Market Liquidity and Financial Stability’ at the 2021 Annual Meeting of CEBRA. The conference is jointly organised with the Leibniz Institute for Financial Research “Sustainable Architecture for Finance in Europe” (SAFE) and will take place virtually at the MIT Golub Center for Finance and Policy from 7-9 July 2021.

With the overall growth of non-bank financial intermediation (NBFI) over the past decade, market liquidity has become more central to financial resilience. The March 2020 market turmoil has underlined the key role that bond markets play for pricing and managing liquidity. The turmoil has also shed light on the evolving interconnections and redistribution of liquidity within the financial system as a result of the increased involvement of non-bank entities in credit provision.

Authors are invited to submit papers that analyse and provide insights on the evolving linkages within the NBFI sector as well as between non-banks and banks (particularly on a cross-border basis), and on how these impact the stability of the financial system. Of particular interest are papers that examine the effects of G20 financial reforms on (government and corporate) bond market liquidity, and the implications for financial stability and the provision of financing to the economy in normal and stress periods.

Papers should be submitted via the SAFE website by 11 May 2021.

Peer Review of the United Kingdom

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The UK authorities have implemented financial sector compensation reforms that are consistent with the FSB Principles and Implementation Standards

The peer review examines implementation of financial sector compensation reforms and focuses on the steps taken by the authorities to implement the FSB’s Principles and Implementation Standards (P&S).

The Review finds that the Prudential Regulation Authority and the Financial Conduct Authority (the Authorities) have implemented financial sector compensation reforms that are consistent with the P&S. Moreover, some of their approaches can serve as examples of good practice for other jurisdictions to consider. While the initial focus was on the banking sector, over time the Authorities have increasingly implemented the P&S in the insurance and asset management sectors. In combination with the Senior Managers and Certification Regime (SM&CR), the remuneration regime has helped firms become more disciplined in mapping responsibilities and has resulted in greater consistency and transparency on acceptable remuneration practices. With implementation well-advanced, the Authorities are increasingly focused on evaluating the regime’s effectiveness.

Notwithstanding this progress, the review concludes that steps can be taken to further strengthen the financial sector compensation framework in a few areas by:

  • reviewing the interaction between the UK’s remuneration regimes and the SM&CR;

  • streamlining data collection for level one banks and investments firms and collecting remuneration data from a broader range of firms;

  • considering other supervisory approaches for assessing the effectiveness of the remuneration regime; and

  • providing additional guidance on remuneration for the insurance sector to promote clarify and consistency of outcomes.

The peer review report includes recommendations to the UK Authorities on these issues.

FSB publishes peer review on the implementation of financial sector compensation reforms in the United Kingdom

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Ref no: 7/2021

The Financial Stability Board (FSB) today published its Peer Review of the United Kingdom (UK). The review focuses on the steps taken by the authorities to implement the FSB’s Principles and Implementation Standards (P&S) for Sound Compensation Practices and to assess the effectiveness of financial sector compensation reforms in the UK.

The review finds that the Prudential Regulation Authority and the Financial Conduct Authority (the Authorities) have implemented reforms that are consistent with the P&S. While the initial focus was on the banking sector, over time the Authorities have increasingly implemented the P&S in the insurance and asset management sectors. Some of their approaches can serve as examples of good practice for other jurisdictions to consider. These include adopting a risk-based and proportional regulatory and supervisory approach; setting expectations through public communication to Remuneration Committee Chairs of firms; a supervisory approach that focuses on close interaction between prudential and conduct rules and reinforces accountability with links to compensation outcomes; and evaluating the regime’s effectiveness.

Clear communication with the industry has helped firms understand and embed the requirements. In combination with the Senior Managers and Certification Regime (SM&CR), the remuneration regime has helped firms become more disciplined in mapping responsibilities and resulted in greater consistency and transparency on acceptable remuneration practices.

Notwithstanding this progress, the review concludes that steps can be taken to further strengthen the financial sector compensation framework in a few areas by:

  • reviewing the interaction between the UK’s remuneration framework and the SM&CR, including how their interplay rewards diligent and proactive risk management;

  • streamlining data collection for so-called ‘level one’ banks and investment firms and collecting remuneration data from a broader range of firms;

  • considering other supervisory approaches for assessing the effectiveness of the remuneration regime, such as additional thematic reviews and onsite visits; and

  • providing additional guidance on remuneration for the insurance sector to promote clarity and consistency of outcomes.

The peer review report includes recommendations to the UK Authorities on these issues.

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 thematic and country reviews, based on the objectives and guidelines set out in the Handbook for FSB Peer Reviews. As part of this commitment, the United Kingdom volunteered to undergo a peer review in 2020. This review forms part of the second round of country peer reviews of FSB member jurisdictions, which examine the implementation of G20 financial regulatory reforms. All completed peer review reports are available on the FSB website.

The draft report was prepared by a team of experts from FSB member institutions and led by Unathi Kamlana, Head of the Policy, Statistics and Industry Support Department at the South African Reserve Bank. The review benefited from dialogue with the UK authorities and market participants as well as from discussion in the FSB Standing Committee on Standards Implementation.

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 Randal K. Quarles, Vice Chairman, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.