FSB reports on its work to develop a roadmap to enhance global cross-border payments

9 April 2020

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Ref no: 9/2020

The Financial Stability Board (FSB) today published the Stage 1 report of its project to develop a roadmap to enhance cross-border payments. This report, which is being delivered to the G20, provides an assessment of existing arrangements and challenges for global cross-border payments.

Enhancing cross-border payments is a G20 priority during the Saudi Arabian Presidency. Faster, cheaper, more transparent and more inclusive cross-border payment services, including remittances, would have widespread benefits for citizens and economies worldwide, supporting economic growth, international trade, global development and financial inclusion.

Enhancing cross-border payments requires addressing frictions in existing cross-border payment processes. These frictions include: fragmented data standards or lack of interoperability; complexities in meeting compliance requirements, including for anti-money laundering and countering the financing of terrorism (AML/CFT), and data protection purposes; different operating hours across different time zones; and outdated legacy technology platforms. A number of public sector initiatives have sought to address these challenges and frictions by enhancing existing payment arrangements.

Financial innovation is creating opportunities to make payments more efficient. Technological innovation could build on existing cross-border and domestic payment arrangements or take the form of new structures and ecosystems. However, the use of new technologies and business models in cross-border payments also involves challenges and risks.

Global cross-border payments are carried out through a diverse multi-layered set of networks. A roadmap for enhancing cross-border payments, therefore, will need to encompass a variety of approaches and time horizons. Some building blocks that form part of the roadmap, which may be shorter-term actions, should benefit a number of different types of existing arrangements. Other building blocks, which may be more medium-term, may go beyond adjustments to existing arrangements by proposing actions that should eventually improve the structure of the system.

The report concludes with some preliminary thoughts on areas to consider when developing the eventual roadmap, which will include practical steps and indicative timeframes. These include questions to explore a range of topics that fall under four broad categories: operational improvement of payment infrastructures; standardisation of data and market practice; legal, regulatory and oversight framework; and progress monitoring and information sharing.

Notes to editors

The G20 at is February 2020 Finance Ministers and Central Bank Governors meeting asked the FSB to coordinate a three-stage process to develop a roadmap to enhance cross-border payments:

  • Assessment (Stage 1): In the report published today, the FSB, in coordination with relevant international organisations and standard-setting bodies has assessed existing arrangements and challenges. The report is being submitted to G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting next week, together with a technical background report providing further details.

  • Building Blocks (Stage 2): The Committee on Payments and Market Infrastructures (CPMI) is leading the work on creating building blocks of a response to improve the current global cross-border payment arrangements. This will set out areas where further public sector work could assist in moving to an improved cross-border payments system and in public goods or removing unnecessary barriers, and accordingly provide an update to the G20 in July 2020.

  • Roadmap (Stage 3): Building on the previous stages, the FSB will coordinate, with CPMI and other relevant international organisations and standard-setting bodies, the development of a roadmap to pave the way forward. In particular, the FSB will report to the G20 on practical steps and indicative timeframes needed to do so. The three-stage process will be submitted as a combined report to the G20 in October 2020.

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

The 17th meeting of the FSB MENA group discusses regional financial stability and the impact of COVID-19

2 April 2020

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Ref no: 8/2020

The Financial Stability Board (FSB) Regional Consultative Group (RCG) for the Middle East and North Africa (MENA) held its 17th RCG MENA meeting via a conference call today to discuss recent macroeconomic and financial market developments, including the financial stability implications from COVID-19.

Members discussed the current strains on the global financial system and financial sector tensions in some member jurisdictions and the measures taken by national authorities to mitigate the economic and financial stability effects of COVID-19. RCG MENA members agreed that, as a result of the post-crisis reforms, the global financial system is now in a better position to withstand shocks, maintain market functioning and sustain the supply of financing to support the real economy. They noted the importance of FSB and non-FSB members continuing to coordinate action, including financial policy responses in their jurisdictions, to maintain global financial stability, keep markets open and functioning, and preserve the financial system’s capacity to finance growth.

The group received an update on the FSB work programme and its deliverables for the Saudi Arabian G20 Presidency, including areas where RCG MENA members could provide input into the FSB’s work.

Notes to editors

The RCG for the MENA is co-chaired by Ahmed Alkholifey, Governor of the Saudi Arabian Monetary Authority, and Rasheed M. Al Maraj, Governor of the Central Bank of Bahrain. Membership includes financial and regulatory 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 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, 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 members take action to ensure continuity of critical financial services functions

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Ref no: 7/2020

Financial Stability Board (FSB) members continue to cooperate and take action nationally and collectively to mitigate the financial risks posed by the COVID-19 pandemic. The FSB Plenary met telephonically on 30 March to review the numerous actions taken to support market functioning and maintain the provision of credit to households and businesses.

A key issue discussed on the call was the critical nature of many financial services and the importance of ensuring their operation throughout the pandemic. Many financial firms have successfully managed to switch to extensive remote working in a relatively short time. Nevertheless, for many financial service firms to continue to operate critical functions, a limited number of essential personnel are required to be on-site. These functions include: providing consumer access to cash, electronic payments and other banking and lending services; as appropriate keeping branches and call centres open; processing claims under government support programmes; insurance services; risk management; supporting financial operations, such as staffing data and security operations centres; and supporting third-party providers who deliver core services. Where public health authorities have implemented social distancing measures, firms must have in place appropriate business continuity plans to respect these measures and facilitate working from home where possible, while ensuring the continuity of critical functions in financial services.

FSB members are actively engaging with national and local authorities to ensure that these essential personnel are permitted to work on-site and that necessary IT equipment are able to be distributed, and strongly recommend that health and safety authorities recognise such workers as essential personnel necessary to maintain infrastructure that is critical to the financial system. Continued FSB coordination is particularly essential given that these operations often span multiple jurisdictions, and FSB members will continue to share information and coordinate action.

The FSB’s overall COVID-19 work includes: (i) regularly sharing information on evolving financial stability threats and on the policy measures that financial authorities are taking; (ii) assessing financial risks and vulnerabilities in the current environment; and (iii) coordinating policy responses to maintain global financial stability, keep markets open and functioning, and preserve the financial system’s capacity to serve households and businesses confronting COVID-19 and thereby finance the resumption of growth. In addition the FSB is re-prioritising its work programme for 2020 to maximise the value of FSB work during the current crisis and to use members’ resources effectively. Further information on the FSB’s actions taken in response to COVID-19 is available on the FSB website.

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, 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.

Guidance on Public Policy Objectives for Deposit Insurance Systems

23 March 2020

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Principle 1 of the Core Principles prescribes that the two primary public policy objectives for deposit insurance systems are to protect depositors and to contribute to financial stability.

This Guidance Paper provides an update on the public policy objectives of deposit insurance systems in different jurisdictions, taking into account recent developments and, where possible, illustrates the policy rationale behind changes in objectives.

It offers supporting guidance points for the effective implementation of Principle 1 (“Public Policy Objectives”) of the IADI Core Principles for Effective Deposit Insurance Systems.

FSB coordinates financial sector work to buttress the economy in response to COVID-19

20 March 2020

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Ref no: 6/2020

The FSB, representing a broad and diverse membership of national authorities, international standard setters and international bodies, is actively cooperating to maintain financial stability during market stress related to COVID-19.

The global financial system today is in a better position to withstand shocks, maintain market functioning and sustain the supply of financing to support the real economy as a result of post-crisis reforms, including the formation of international coordination mechanisms like the FSB. The FSB encourages authorities and financial institutions to make use of the flexibility within existing international standards to provide continued access to funding for market participants and for businesses and households facing temporary difficulties from COVID-19, and to ensure that capital and liquidity resources in the financial system are available where they are needed. Many members of the FSB have already taken action to release available capital and liquidity buffers, in addition to actions to support market functioning and accommodate business continuity plans.

FSB members, including the international standard setting bodies, are cooperating closely. They will continue to coordinate action, including financial policy responses in their jurisdictions, to maintain global financial stability, keep markets open and functioning, and preserve the financial system’s capacity to finance growth.

Notes to editors

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies, including the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), the International Association of Insurance Supervisors (IAIS) and the International Organization of Securities Commissions (IOSCO), 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 publishes peer review on implementation of over-the-counter derivatives reforms in Mexico

19 March 2020

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Ref no: 5/2020

The Financial Stability Board (FSB) published today its peer review of Mexico, which examined the implementation of the G20 commitments on over-the-counter (OTC) derivatives.

Mexico’s OTC derivatives market is relatively small from a global perspective, but is the largest in Latin America. The market has a substantial cross-border component, with foreign banks being important players. Interest rate derivatives are the predominant asset class as measured by notional amount outstanding, while foreign exchange trades dominate daily turnover.

The peer review finds that the Mexican financial authorities have made good overall progress in their implementation of OTC derivatives reforms. Mexico does not have a specific law dedicated to regulating OTC derivatives markets, but the authorities in recent years undertook several initiatives to enhance rules and procedures in this area. These include implementing comprehensive requirements for trade reporting, central clearing and platform trading, with a strong focus on quality, public transparency, and analysis of trade repository (TR) data. The authorities have advanced these reforms in a thoughtful, collaborative and proactive manner.

Notwithstanding these achievements, the review concludes that further steps can be taken by:

  • completing implementation of remaining OTC derivatives reforms on a timely basis, including margin and final capital requirements for non-centrally cleared derivatives;

  • expanding the authority of the National Banking and Securities Commission (CNBV) for aspects of the supervision and enforcement of conduct of market participants; and

  • expanding the scope and sharing of TR data, including by removing barriers to full reporting of Mexican TR data to foreign TRs.

The peer review report includes recommendations to the Mexican financial authorities in order to address these issues. These steps should be supported by efforts to ensure that the authorities – particularly the CNBV – have adequate resources and powers to fulfil current and potentially expanded OTC derivatives-related responsibilities.

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, Mexico volunteered to undergo a peer review in 2019. 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. The schedule of country peer reviews, as well as all completed peer review reports, is available on the FSB website.

The report describes the findings and recommendations of the peer review of Mexico. The draft report was prepared by a team of experts from FSB member institutions and led by Ángel Benito, Commissioner at the National Securities Market Commission in Spain. The review benefited from dialogue with the Mexican authorities and private sector representatives as well as from discussion in the FSB Standing Committee on Standards Implementation.

On 11 March 2020, a regulatory amendment was published for consultation that, according to the Mexican financial authorities, would remove some of the barriers to full reporting of Mexican TR data to foreign TRs and thereby address some of the findings in this report. However, the review team has not examined this draft regulation.

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 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.

Peer Review of Mexico

| PDF full text (714 KB)

This peer review examined the implementation of the G20 commitments on over-the-counter (OTC) derivatives in Mexico. The report finds that the Mexican financial authorities have made good overall progress in their implementation of OTC derivatives reforms. Mexico does not have a specific law dedicated to regulating OTC derivatives markets, but the authorities in recent years undertook several initiatives to enhance rules and procedures in this area. These include implementing comprehensive requirements for trade reporting, central clearing and platform trading, with a strong focus on quality, public transparency, and analysis of trade repository (TR) data. The authorities have advanced these reforms in a thoughtful, collaborative and proactive manner.

Notwithstanding these achievements, the review concludes that further steps can be taken:

  • completing implementation of remaining OTC derivatives reforms on a timely basis, including margin and final capital requirements for non-centrally cleared derivatives;

  • expanding the authority of the National Banking and Securities Commission (CNBV) for aspects of the supervision and enforcement of conduct of market participants; and

  • expanding the scope and sharing of TR data, including removing barriers to full reporting of Mexican TR data to foreign TRs.

The peer review report includes recommendations to the Mexican financial authorities in order to address these issues. These steps should be supported by efforts to ensure that the authorities – particularly the CNBV – have adequate resources and powers to fulfil current and potentially expanded OTC derivatives related responsibilities.

Peer Review of South Africa

16 March 2020 | PDF full text (638 KB)

This peer review examined the framework for bank resolution and deposit insurance in South Africa. The review finds that good progress has been made in recent years on both topics. The authorities have applied the lessons from recent bank failures to inform the proposals for adoption of a resolution regime broadly aligned with the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions. Moreover, the proposed introduction of a deposit insurance system demonstrates the authorities’ commitment to implement the International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance Systems.

Notwithstanding this progress, the review concludes there is additional work to be done to ensure the new measures can be implemented effectively:

  • On the bank resolution framework:

    • setting a clear implementation roadmap, including the identification and sequencing of key policies, timelines for delivery and resource requirements;

    • enhancing the operating model for the South African Reserve Bank as resolution authority;

    • reviewing emergency liquidity arrangements in light of the new resolution framework; and

    • introducing a mechanism for ex post recovery from the industry of public funds used for resolution.

  • On deposit insurance:

    • developing the functional expertise at the deposit insurer;

    • launching a comprehensive public awareness campaign covering different stages of the establishment of the deposit insurance system;

    • reviewing the design features after the deposit insurance system is established; and

    • enhancing the funding structure of the deposit insurance fund by building up the size of the equity tranche, determining a long-term target fund size and setting a reasonable time frame to achieve it.

FSB publishes peer review on implementation of bank resolution and deposit insurance reforms in South Africa

Press enquiries:
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Ref no: 4/2020

The Financial Stability Board (FSB) published today its peer review of South Africa, which examined the framework for bank resolution and deposit insurance. The review focused on the steps taken by the authorities to implement reforms in these areas, including by following up on relevant International Monetary Fund (IMF)-World Bank Financial Sector Assessment Program (FSAP) recommendations and G20/FSB commitments.

The review finds that good progress has been made in recent years on both topics. The authorities have applied the lessons from recent bank failures to inform the proposals for adoption of a resolution regime broadly aligned with the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions. Moreover, the proposed introduction of a deposit insurance system demonstrates the authorities’ commitment to implement the International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance Systems.

Notwithstanding this progress, the review concludes there is additional work to be done to ensure the new measures can be implemented effectively:

  • On the bank resolution framework:

    • setting a clear implementation roadmap, including the identification and sequencing of key policies, timelines for delivery and resource requirements;

    • enhancing the operating model for the South African Reserve Bank as resolution authority;

    • reviewing emergency liquidity arrangements in light of the new resolution framework; and

    • introducing a mechanism for ex post recovery from the industry of public funds used for resolution.

  • On deposit insurance:

    • developing the functional expertise at the deposit insurer;

    • launching a comprehensive public awareness campaign covering different stages of the establishment of the deposit insurance system;

    • reviewing the design features after the deposit insurance system is established; and

    • enhancing the funding structure of the deposit insurance fund by building up the size of the equity tranche, determining a long-term target fund size and setting a reasonable time frame to achieve it.

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, South Africa volunteered to undergo a peer review in 2019. 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. The schedule of country peer reviews, as well as all completed peer review reports, is available on the FSB website.

The report describes the findings and recommendations of the peer review of South Africa. The draft report was prepared by a team of experts from FSB member institutions and led by Mike Mercer, Senior Vice President at the Canada Deposit Insurance Corporation. The review benefited from dialogue with the South African 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 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.

Guidance on Digital Identity

6 March 2020

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FATF issued Guidance on Digital Identity in March 2020 to facilitate better use of digital solutions for undertaking customer due diligence and future-proof anti-money laundering systems. It helps governments, financial institutions and other relevant entities apply a risk-based approach to the use of digital ID for customer identification and verification of natural person customers. This Guidance draws on a number of digital ID assurance frameworks and standards to draw links between the technical world of digital ID and those developing policies for the financial sector. The Guidance clarifies that trustworthy digital IDs can reduce the risks and provide easier, cheaper and more secure methods to identify individuals. The Guidance also clarifies that non-face-to-face customer-identification and transactions that rely on reliable, independent digital ID systems with appropriate risk mitigation measures in place, may present a standard level of risk, and may even be lower-risk.

A robust digital ID can allow individuals without a traditional identification to nonetheless have a sound form of identification to access financial services and improve financial inclusion. The FATF Guidance specifically outlines how digital ID systems with different assurance levels for identity proofing/enrolment and/or authentication can be used to implement tiered CDD, allowing clients a range of account functionalities depending on the extent of CDD performed, and particularly in situations of lower risk.

Adoption of digital ID systems has the potential to address potential delays in cross-border payments. The FATF Guidance recommends that authorities monitor developments in the digital ID space with a view to share knowledge, best practices, and to establish legal frameworks at both the domestic and international level that promote responsible innovation and allow for greater flexibility, efficiency and functionality of digital ID systems, both within and across borders. Greater standardisation or mapping of digital ID standards could facilitate greater cross-border recognition of digital IDs for customer due diligence and facilitate new payment mechanisms and improve the efficiency of existing payment mechanisms.