Continuity of access to FMIs for firms in resolution: Streamlined information collection to support resolution planning

20 August 2021

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The questionnaire was developed in consultation with financial market infrastructures (FMIs), FMI participants and FMI oversight authorities. It covers general information on the FMI and its legal structure; the rulebook/contractual provisions regarding termination; and arrangements and operational processes to facilitate continued access in resolution. It is designed to reduce the burden of duplicative information-gathering efforts by streamlining the collection of certain baseline information relevant to continuity of access in resolution. The questionnaire aims to reduce the “many to one” nature of inquiries from FMI participants and authorities to FMIs for resolution planning and streamline the provision of this information from FMIs to firms and authorities through the use of a common template.

Continuity of access to FMI services (FMI intermediaries) for firms in resolution: Framework for information from FMI intermediaries to support resolution planning

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The framework seeks to help financial market infrastructure (FMI) intermediaries better understand which information clients and their resolution authorities (Ras) may need from them. It does so by providing an overview of the baseline information that is potentially relevant for clients and RAs, which they and FMI intermediaries can then discuss, as needed, in their bilateral engagement. Thus the framework makes it more predictable for FMI intermediaries which topics could be part of information requests from their clients and/or from their clients’ RAs. This could potentially allow them to identify opportunities to streamline their response process, reducing the resources required to provide this information.

Public responses to consultation on policy proposals to enhance money market fund resilience

18 August 2021

Summary of document history

Summary of document history

On 30 June 2021, the FSB published Policy proposals to enhance money market fund resilience: Consultation Report. Interested parties were invited to provide written comments by 16 August 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 expects to publish the final policy proposals in October 2021.

Virtual workshop on the lessons learnt from the COVID-19 pandemic from a financial stability perspective

13 August 2021

On 1 September the FSB hosted a virtual outreach workshop to discuss the FSB’s interim lessons learnt report. The report identifies preliminary lessons from the COVID-19 experience and aspects of the functioning of the G20 financial reforms that may warrant attention at the international level. Stakeholder feedback will help inform the FSB’s final report, which will be published ahead of the G20 Summit in October 2021.

FSB workshop on compensation practices 2021: Summary of discussion

9 August 2021 | PDF full text (153 KB)

On 18 and 19 May 2021, the Financial Stability Board (FSB) hosted an industry virtual workshop as a part of its regular assessment of the effectiveness of the implementation of the FSB’s Principles for Sound Compensation Practices and their Implementation Standards.

The workshop was an opportunity to exchange information on key compensation issues and challenges for the effective alignment of risk and compensation, with an additional focus on the impact of the pandemic on firms’ compensation practices. The workshop covered:

  1. Non-financial criteria and measures, behaviours and firm culture – Participants identified trends in the use of non-financial criteria, potential differences across sectors and how these criteria affect and are affected by firm culture.

  2. Effective alignment of risk and compensation – Participants identified effective practices for alignment between risk and compensation and how practices may vary across sectors.

  3. Legal and regulatory issues – The discussion focused on the most significant legal and regulatory impediments to the use of compensation tools, such as malus and clawback and possible steps to address these. The session also explored firms’ use of severance pay.

  4. COVID-19 and compensation – Participants discussed compensation-related actions firms and supervisors have taken in relation to COVID-19.

The discussions from the workshop are an input into the FSB’s ongoing work on identifying effective practices and enhancements to compensation frameworks.

Virtual workshop on policy proposals to enhance money market fund resilience

29 July 2021

Summary of document history

Summary of document history

On 12 July 2021 the FSB hosted a virtual workshop to discuss its consultation report on its policy proposals to enhance money market fund (MMF) resilience.

The objective of the workshop was for officials from FSB member authorities involved in the preparation of the consultation report to exchange views with industry representatives, academics and other stakeholders on the analysis of MMF vulnerabilities and on the policy options to address them.

More details on the workshop can be found in the agenda. The workshop, together with written consultation responses, will inform the final FSB report, which will be published ahead of the G20 Summit in October 2021.

Public responses to consultation on Targets for Addressing the Four Challenges of Cross-Border Payments

20 July 2021

Summary of document history

Summary of document history

On 31 May 2021, the FSB published Targets for Addressing the Four Challenges of Cross-Border Payments: Consultative document. Interested parties were invited to provide written comments by 6 July 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 expects to publish the final targets in October 2021.

Lessons learnt from the COVID-19 pandemic from a financial stability perspective: Interim report

13 July 2021 | PDF full text (718 KB)

The COVID-19 pandemic presents a real-life test that may hold important lessons for financial policy, including the functioning of G20 reforms.

The COVID-19 pandemic is the first major test of the global financial system since the G20 reforms were put in place following the financial crisis of 2008. While significantly different in nature from the 2008 crisis, this real-life test may hold important lessons for financial policy, including the functioning of the G20 reforms.

The report identifies preliminary lessons for financial stability from the COVID-19 experience and aspects of the functioning of the G20 financial reforms that may warrant attention at the international level.

The report notes that, thus far, the global financial system has weathered the pandemic thanks to greater resilience, supported by the G20 reforms, and the swift, determined and bold international policy response. Authorities broadly used the flexibility within international standards to support financing to the real economy. Monitoring and coordination, guided by the FSB COVID-19 Principles, has discouraged actions that could distort the level playing field and lead to harmful market fragmentation.

The COVID-19 experience reinforces the importance of completing remaining elements of the G20 reform agenda. The financial stability benefits of the full, timely and consistent implementation of those reforms remain as relevant as when they were agreed. Those parts of the global financial system where implementation of the reforms is most advanced displayed resilience. The pandemic has highlighted the importance of effective operational risk management arrangements and the need to further enhance crisis management preparedness and promote resilience amidst rapid technological change.

The pandemic also highlighted differences in resilience within and across financial sectors. The March 2020 market turmoil has underscored the need to strengthen resilience in non-bank financial intermediation. The functioning of capital and liquidity buffers may warrant further consideration, while some concerns about excessive financial system procyclicality remain.

COVID-19 may yet test the resilience of the global financial system. Banks and non-bank lenders could face additional losses as support measures are unwound. Identifying systemic vulnerabilities early on remains a priority. One of the legacies of the pandemic may be a build-up of leverage and debt overhang in the non-financial sector. Addressing debt overhang, including by facilitating the market exit of unviable companies and by promoting the efficient reallocation of resources to viable firms, may be a key task for policymakers going forward.

The FSB will engage with external stakeholders on preliminary findings and issues raised in this report. The final report, which will incorporate this feedback and set out tentative lessons and next steps to address the identified issues, will be delivered to the G20 Summit in October.

FSB identifies preliminary lessons for financial stability from the COVID-19 experience

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Ref no: 19/2021

The Financial Stability Board (FSB) today published its Interim Report on the Lessons Learnt from the COVID-19 Pandemic from a Financial Stability Perspective. The report identifies preliminary lessons for financial stability and aspects of the functioning of the G20 financial reforms that may warrant attention at the international level.

The COVID-19 pandemic is the first major test of the global financial system since the G20 reforms were put in place following the financial crisis of 2008. Thus far, the financial system has weathered the pandemic thanks to greater resilience, supported by the G20 reforms, and the swift, determined and bold international policy response. Authorities broadly used the flexibility within international standards to support financing to the real economy. Monitoring and coordination, guided by the FSB COVID-19 Principles, has discouraged actions that could distort the level playing field and lead to harmful market fragmentation.

The COVID-19 experience reinforces the importance of completing remaining elements of the G20 reform agenda. Those parts of the global financial system where implementation of the reforms is most advanced displayed resilience. The functioning of capital and liquidity buffers may warrant further consideration, while some concerns about excessive financial system procyclicality remain.

The March 2020 market turmoil has underscored the need to strengthen resilience in non-bank financial intermediation. The FSB has developed a comprehensive work programme to enhance the resilience of the NBFI sector while preserving its benefits.

The pandemic has also highlighted the importance of effective operational risk management arrangements, the need to enhance further crisis management preparedness, and the importance of promoting financial resilience amidst rapid technological change more generally.

COVID-19 may yet test the resilience of the global financial system. Banks and non-bank lenders could face additional losses as support measures are unwound. Addressing debt overhang, including by facilitating the market exit of unviable companies and by promoting the efficient reallocation of resources to viable firms, may be a key task for policymakers going forward.

The FSB will engage with external stakeholders on preliminary findings and issues raised in this report. The final report, to be delivered to the G20 Summit in October, will set out tentative lessons and next steps to address the identified issues.

Notes to editors

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, Governor and Vice Chair for Supervision, 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.