Principles for operational resilience

31 March 2021

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The principles aim to strengthen banks’ ability to withstand operational risk-related events that could cause significant operational failures or wide-scale disruptions in financial markets, such as pandemics, cyber incidents, technology failures or natural disasters. The approach builds on revisions to the BCBS , and draws from previously issued principles on corporate governance for banks, as well as outsourcing-, business continuity- and relevant risk management-related guidance.

FSB Middle East and North Africa group discusses financial market developments and enhancing cross-border payments

24 March 2021

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Ref no: 4/2021

The Financial Stability Board (FSB) Regional Consultative Group (RCG) for the Middle East and North Africa (MENA) held its 19th (virtual) meeting today to discuss financial stability issues affecting the region, including those stemming from recent developments associated with the COVID‑19 pandemic.

Members also exchanged views on some of the challenges in assessing the effectiveness of policy measures to support those parts of the economy most vulnerable to the pandemic and in creating an exit strategy from temporary support. Members reiterated the importance of international cooperation to evaluate and coordinate the policy responses, including considerations for their future unwinding.

The group received an update on the FSB’s work programme, including planned deliverables to the G20 during the Italian G20 Presidency in 2021, also incorporating follow-up on initiatives begun during the Saudi Arabian G20 Presidency in 2020. Key FSB deliverables for 2021 include: a report on lessons learned from financial policy responses to COVID-19; work on strengthening the resilience of non-bank financial intermediation (NBFI); implementing the G20 roadmap to enhance cross-border payments; transitioning away from LIBOR; strengthening cyber and operational resilience; and analysing and addressing climate-related financial risks.

RCG MENA members explored ways to contribute to the FSB’s work, in particular to the G20’s roadmap on enhancing cross-border payments. The roadmap provides a set of actions, with milestones, to make cross-border payments faster, cheaper, more transparent, and more inclusive. Members discussed, as part of the work on the roadmap, the steps being taken to strengthen regulation, supervision and oversight of global stablecoins arrangements. Members looked forward to continuing their discussions on enhancing cross-border payments at their workshop on instant payments the following day, when they would also benefit from exchanging views and experiences from private sector participants.

Notes to editors

The FSB RCG for the Middle East and North Africa is co-chaired by Fahad Almubarak, Governor of the Saudi Central Bank, and Rasheed Al-Maraj, Governor of the Central Bank of Bahrain. Membership includes financial authorities from Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, Turkey and the United Arab Emirates.

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. [←]

COVID-19: a watershed for the FSB’s work agenda

18 March 2021 | PDF full text (122 KB)

Remarks by Dietrich Domanski at the launch of the International Regulatory Strategy Group’s (IRSG) latest report entitled, ‘Global Solutions to Global Problems: Promoting Regulatory Coherence in Financial Services for Pandemic Recovery’.

FSB publishes peer review on implementation of over-the-counter derivatives market reforms in Indonesia

26 February 2021

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Ref no: 3/2021

The Financial Stability Board (FSB) today published its Peer Review of Indonesia. The review examines steps the authorities have taken to implement over-the-counter (OTC) derivatives market reforms in Indonesia, including by following up on relevant G20 commitments.

Indonesia’s OTC derivatives market is relatively small, both compared to its economy and from a global perspective, but has been steadily growing over the past five years. Foreign exchange (FX) derivatives are by far the largest OTC derivatives class, followed by interest rate and commodity derivatives. Domestic banks, including local subsidiaries of foreign banking groups and local branches of foreign banks, are the most active market participants.

The review finds that the Indonesian authorities have made some progress in implementing OTC derivatives reforms, while focusing on developing their domestic derivatives market. Reporting requirements have been in place for banks’ OTC FX and interest rate derivatives transactions and for other participants’ commodity derivatives transactions for many years, and there is effective sharing and use of the data collected among domestic authorities. Progress continues on central clearing requirements and margin requirements for non-centrally cleared derivatives (NCCDs), and the authorities are appropriately prioritising these areas over establishing platform trading. The report notes the authorities’ continued progress on these reforms despite pressures in the wake of the COVID-19 pandemic.

Notwithstanding this progress, the review concludes that further steps can be taken by:

  • improving the reporting, use and public transparency of OTC derivatives data, including a timeline for adopting unique global identifiers for entities, transactions and products;

  • addressing legal uncertainties relating to netting for derivatives transactions in bankruptcy in order to facilitate central clearing and margin requirements; and

  • implementing the remaining OTC derivatives reforms (central clearing of standardised OTC derivatives, margin requirements for NCCDs, and capital requirements for exposures to central counterparties) in an appropriately sequenced manner.

The peer review report includes recommendations to the Indonesian authorities in order to address 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, Indonesia 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 Daphne Doo, who at the time of the review was Senior Director, Supervision of Markets, Hong Kong Securities and Futures Commission. The review benefited from dialogue with the Indonesian authorities and private sector representatives 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.

Peer Review of Indonesia

| PDF full text (550 KB)

Indonesia continues to implement over-the-counter derivatives reforms as it develops its domestic derivatives market.

This peer review examines the implementation of the G20 commitments on over-the-counter (OTC) derivatives market reforms in Indonesia.

The review finds that the Indonesian authorities have made some progress in implementing OTC derivatives reforms, while focusing on developing their domestic derivatives market. Reporting requirements have been in place for banks’ OTC foreign exchange and interest rate derivatives transactions and for other participants’ commodity derivatives transactions for many years, and there is effective sharing and use of the data collected among domestic authorities. Progress continues on central clearing requirements and margin requirements for non-centrally cleared derivatives (NCCDs), and the authorities are appropriately prioritising these areas over establishing platform trading. The report notes the authorities’ continued progress on these reforms despite pressures in the wake of the COVID-19 pandemic.

Notwithstanding this progress, the review concludes that further steps can be taken. These include:

  • improving the reporting, use and public transparency of OTC derivatives data, including a timeline for adopting unique global identifiers for entities, transactions and products;

  • addressing legal uncertainties relating to netting for derivatives transactions in bankruptcy in order to facilitate central clearing and margin requirements; and

  • implementing the remaining OTC derivatives reforms (central clearing of standardised OTC derivatives, margin requirements for NCCDs, and capital requirements for exposures to central counterparties) in an appropriately sequenced manner.

The peer review report includes recommendations to the Indonesian authorities in order to address these issues.

FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: February 2021

25 February 2021 | PDF full text (152 KB)

The FSB’s ambitious work programme for 2021 seeks to address vulnerabilities directly related to COVID-19 and to increase resilience of non-bank financial intermediation

This letter from the FSB Chair, Randal K. Quarles, to G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting on 26 February notes the unprecedented challenges faced by the FSB, like many others, due to the outbreak of COVID-19 and the imposition of containment measures across the globe (the “COVID Event”). Nevertheless, over the past year, FSB members’ actions have demonstrated their responsiveness to crisis; coordination in action; and adaptability. These attributes remain as critical now, with a still uncertain pathway to a post-COVID world, as during the past year.

Against this backdrop, the FSB’s ambitious work programme for 2021 seeks to address vulnerabilities directly related to COVID-19 and to increase resilience of non-bank financial intermediation (NBFI). It also aims to support strong, sustainable, and balanced growth in a post-COVID world. Key priorities include:

  • Addressing COVID-19 related vulnerabilities. The FSB will produce an assessment of initial lessons learned from the COVID Event for financial stability. The FSB will report in April on factors needed for an orderly unwinding of support measures, as part of its work to support international coordination on COVID-19 policy responses. The FSB will also publish in April the final version of its evaluation of too-big-to-fail reforms for banks
  • Increasing the resilience of NBFI. The FSB’s work includes examining and addressing specific risk factors that contributed to amplification of the March 2020 market turmoil; enhancing understanding of systemic risks in NBFI; and investigating policies to address these risks. As part of this work, the FSB will deliver policy proposals to enhance the resilience of money market funds in July for public consultation.
  • Improving efficiency and access in cross-border payments. As well as an overall progress report in October on the implementation of the FSB roadmap to enhance cross-border payments, the FSB will deliver a final set of quantitative targets for making cross-border payments cheaper, faster, more transparent, and more inclusive. The FSB will also update on regulatory and supervisory approaches to global ‘stablecoins’.
  • Bettering our understanding of climate-related risks. Building on its report on the financial stability implications of climate change, the FSB will assess the availability of data through which climate-related risks to financial stability could be monitored, as well as any data gaps. The FSB will also coordinate with other SSBs to promote globally comparable, high-quality, and auditable standards of disclosure; and review regulatory and supervisory approaches to addressing climate-related risks at financial institutions.

These initiatives will provide a meaningful contribution as market participants and financial authorities seek to ensure that financial markets have the information and tools they need to manage risks, and seize opportunities, stemming from climate change.

  • Addressing other financial stability topics of ongoing importance. Addressing challenges to, and opportunities for, enhancing financial stability that existed before the COVID Event remain important. The FSB’s work includes enhancing central counterparty resilience, recovery, and resolvability; exploring areas to harmonise cyber incident reporting; and ensuring a smooth transition away from LIBOR by end-2021 to more robust benchmarks.

The letter notes that the FSB, with its broad and diverse membership, is well positioned to tackle the global financial stability issues outlined above. The FSB will also continue to engage with external stakeholders through workshops, public consultations on key policy reports, and other mechanisms. The FSB’s work will result in robust analysis and proposals to help define a path forward and highlight issues that may arise as we continue to navigate these unpredictable times.

FSB Chair updates Finance Ministers and Central Bank Governors on the FSB’s key priorities for 2021

Press enquiries:
+41 61 280 8486
[email protected]
Ref no: 2/2021

The Financial Stability Board (FSB) today published a letter from its Chair Randal K. Quarles to G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting on 26 February.

The letter notes the unprecedented challenges faced by the FSB, like many others, due to the outbreak of COVID-19 and the imposition of containment measures across the globe (the “COVID Event”). Nevertheless, over the past year, FSB members’ actions have demonstrated their responsiveness to crisis; coordination in action; and adaptability. These attributes remain as critical now, with a still uncertain pathway to a post-COVID world, as during the past year.

Against this backdrop, the FSB’s ambitious work programme for 2021 seeks to address vulnerabilities directly related to COVID-19 and to increase resilience of non-bank financial intermediation (NBFI). It also aims to support strong, sustainable, and balanced growth in a post-COVID world. Key priorities are:

  • Addressing COVID-19 related vulnerabilities. The FSB will produce an assessment of initial lessons learned from the COVID Event for financial stability. The FSB will report in April on factors needed for an orderly unwinding of support measures, as part of its work to support international coordination on COVID-19 policy responses. The FSB will also publish in April the final version of its evaluation of too-big-to-fail reforms for banks

  • Increasing the resilience of NBFI. The FSB’s work includes examining and addressing specific risk factors that contributed to amplification of the March 2020 market turmoil; enhancing understanding of systemic risks in NBFI; and investigating policies to address these risks. As part of this work, the FSB will deliver policy proposals to enhance the resilience of money market funds in July for public consultation.

  • Improving efficiency and access in cross-border payments. As well as an overall progress report in October on the implementation of the FSB roadmap to enhance cross-border payments, the FSB will deliver a final set of quantitative targets for making cross-border payments cheaper, faster, more transparent, and more inclusive. The FSB will also update on regulatory and supervisory approaches to global ‘stablecoins’.

  • Bettering our understanding of climate-related risks. Building on its report on the financial stability implications of climate change, the FSB will assess the availability of data through which climate-related risks to financial stability could be monitored, as well as any data gaps. The FSB will also coordinate with other SSBs to promote globally comparable, high-quality, and auditable standards of disclosure; and review regulatory and supervisory approaches to addressing climate-related risks at financial institutions.

These initiatives will provide a meaningful contribution as market participants and financial authorities seek to ensure that financial markets have the information and tools they need to manage risks, and seize opportunities, stemming from climate change.

  • Addressing other financial stability topics of ongoing importance. Addressing challenges to, and opportunities for, enhancing financial stability that existed before the COVID Event remain important. The FSB’s work includes enhancing central counterparty resilience, recovery, and resolvability; exploring areas to harmonise cyber incident reporting; and ensuring a smooth transition away from LIBOR by end-2021 to more robust benchmarks.

The letter notes that the FSB, with its broad and diverse membership, is well positioned to tackle the global financial stability issues outlined above. The FSB will also continue to engage with external stakeholders through workshops, public consultations on key policy reports, and other mechanisms. The FSB’s work will result in robust analysis and proposals to help define a path forward and highlight issues that may arise as we continue to navigate these unpredictable times.

Notes to editors

The FSB’s 2021 work programme was published in January 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.

Public responses to the Regulatory and Supervisory Issues Relating to Outsourcing and Third-Party Relationships: Discussion paper

22 January 2021

Summary of document history

Summary of document history

On 9 November 2020, the FSB published a discussion paper for public consultation on Regulatory and Supervisory Issues Relating to Outsourcing and Third-Party Relationships. Interested parties were invited to provide written comments by 8 January 2021. The public comments received are available below.

Responses received

The FSB thanks those who took the time and effort to express their views. The FSB will continue to discuss regulatory and supervisory approaches relating to outsourcing and third-party relationships.

FSB Work Programme for 2021

20 January 2021 | PDF full text (1 MB)

FSB 2021 work programme reflects a strategic shift in priorities in the COVID-19 environment

This work programme details the FSB’s planned work and provides an indicative timeline of main publications for 2021. The FSB will reinforce its forward-looking monitoring of developments to identify, assess and address new and emerging risks to global financial stability, and continue to assess the functioning of the regulatory framework put in place after the 2008 global financial crisis.

Important specific FSB work programme items, which include key deliverables to the G20 Italian Presidency, are:

  • International cooperation and coordination related to COVID-19. The FSB will continue to assess vulnerabilities in the global financial system; share information on policy responses; assess their effectiveness and coordinate the future timely unwinding of the temporary measures taken; and monitor the use of flexibility and consistency of policy responses with existing international financial standards.

  • Non-bank financial intermediation (NBFI). Work will focus on the specific issues identified in the FSB holistic review, including money market funds, open-ended funds, margin calls, bond market liquidity and cross-border USD funding. An evaluation of the effects of G20 financial reforms on bond market liquidity will be launched.

  • CCP resilience, recovery and resolvability. Work will consider the need for, and develop as appropriate, international policy on financial resources in recovery and resolution to further strengthen the resilience and resolvability of CCPs.

  • Cross-border payments. A number of actions under the FSB roadmap to enhance cross-border payments will be completed, including the development of quantitative targets for the roadmap, a stocktake of data frameworks and exploration of the scope for, and obstacles to develop a global digital Unique Identifier.

  • Climate change and sustainable finance. The FSB will explore ways to promote globally comparable, high-quality and auditable standards of disclosure based on the TCFD recommendations, and review regulatory and supervisory approaches to addressing climate risks at financial institutions.

  • Interest rate benchmarks. The FSB will continue to support transition away from LIBOR, which is to discontinue after 2021, to more robust benchmarks and report on transition progress to the G20.

  • Cyber and operational resilience. The FSB will also explore the scope for convergence in the regulatory reporting of cyber incidents and the need for revisions to the FSB Cyber Lexicon