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.

Peer Review of Mexico

19 March 2020 | PDF full text (679 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.

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

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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 South Africa

16 March 2020 | PDF full text (583 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:
+41 61 280 8138
[email protected]
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

View the Standard

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.

Financial Stability Board survey on implementation reports

25 February 2020

A key task of the Financial Stability Board (FSB) is to report on progress by FSB member jurisdictions in implementing the G20 post-crisis financial regulatory reforms. To do so, the FSB monitors implementation and publishes various types of progress reports and peer review reports.

The FSB is interested in learning which implementation reports readers find most useful and what we can do to improve their content. Please take 3 minutes of your time to complete this survey.  Survey responses are anonymous. The survey closes at 17:00 CET on Thursday 5 March.

Thank you for your time.

FSB Chair sets out focus for Saudi Arabian G20 Presidency

19 February 2020

Press enquiries:
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Ref no: 3/2020

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 meetings in Riyadh later this week.

The letter notes that the global financial system is constantly facing new challenges. Technology is changing the nature of traditional finance; the non-bank sector has grown and requires deeper understanding and coordination among the supervisory and regulatory community. Pressures that can lead to market fragmentation exist. Concurrently, important supervisory and regulatory issues require attention. 

Against this backdrop, focus areas for the FSB’s work for the Saudi Arabian G20 include:

  • LIBOR transition. LIBOR is facing cessation in less than two years, but the official and private sectors have much to accomplish to ensure a smooth transition to a post-LIBOR world. The FSB welcomes the increased G20 focus on the issue of LIBOR transition and will publish reports on this transition in July and December.

  • Technology. Building on work published last year, the FSB will provide a report on the implications of the provision of financial services by large technology firms (BigTechs) for emerging market and developing economies. The G20 Presidency has also asked the FSB to submit a report on the range of practices in the use of technology in regulation (‘RegTech’) and supervision (‘SupTech’).

  • So-called ‘stablecoins’. The FSB is resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments. It will issue a draft report on regulatory issues and possible responses for public consultation in April.

  • Cross-border payments. Recognising the importance of efficient and inclusive payment services for global growth, the Saudi G20 Presidency has requested the FSB to coordinate the development of a roadmap for improving cross-border payments. The FSB will deliver this roadmap to the G20 in October.

  • Non-bank financial intermediation (NBFI). NBFI now accounts for roughly half of global financial assets. As this sector grows and evolves, there may be new vulnerabilities that need assessment. The FSB is considering what work is appropriate and whether to reorganize existing work on NBFI.

  • Evaluating the post-crisis regulatory framework. The FSB is continuing to evaluate whether the post-crisis financial regulatory reforms are working as intended. In June it will publicly consult on an evaluation to assess the extent to which too-big-to-fail reforms are reducing the systemic and moral hazard risks associated with systemically important banks. The FSB will also continue its work to address unintended, negative effects of fragmentation started under the previous G20 presidency.

  • Implementation monitoring. Finalising post-crisis reforms and monitoring their effective implementation remains a priority. Much of the new financial regulatory framework called for by the G20 is largely in place, but implementation is not complete. The FSB will deliver its annual report on progress in implementation ahead of the G20 Summit.

Notes to editors

The FSB’s 2020 work programme was published in December. 

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 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.

FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: February 2020

| PDF full text (237 KB)

This letter was sent by the FSB’s Chair, Chair Randal K. Quarles, to G20 Finance Ministers and Central Bank Governors ahead of their meetings in Riyadh from 22-23 February.

The letter notes that the global financial system is constantly facing new challenges. Technology is changing the nature of traditional finance; the non-bank sector has grown and requires deeper understanding and coordination among the supervisory and regulatory community. Pressures that can lead to market fragmentation exist. Concurrently, important supervisory and regulatory issues require attention. 

Against this backdrop, focus areas for the FSB’s work for the Saudi Arabian G20 include:

  • LIBOR transition. LIBOR is facing cessation in less than two years, but the official and private sectors have much to accomplish to ensure a smooth transition to a post-LIBOR world. The FSB welcomes the increased G20 focus on the issue of LIBOR transition and will publish reports on this transition in July and December.

  • Technology. Building on work published last year, the FSB will provide a report on the implications of the provision of financial services by large technology firms (BigTechs) for emerging market and developing economies. The G20 Presidency has also asked the FSB to submit a report on the range of practices in the use of technology in regulation (‘RegTech’) and supervision (‘SupTech’).

  • So-called ‘stablecoins’. The FSB is resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments. It will issue a draft report on regulatory issues and possible responses for public consultation in April.

  • Cross-border payments. Recognising the importance of efficient and inclusive payment services for global growth, the Saudi G20 Presidency has requested the FSB to coordinate the development of a roadmap for improving cross-border payments. The FSB will deliver this roadmap to the G20 in October.

  • Non-bank financial intermediation (NBFI). NBFI now accounts for roughly half of global financial assets. As this sector grows and evolves, there may be new vulnerabilities that need assessment. The FSB is considering what work is appropriate and whether to reorganize existing work on NBFI.

  • Evaluating the post-crisis regulatory framework. The FSB is continuing to evaluate whether the post-crisis financial regulatory reforms are working as intended. In June it will publicly consult on an evaluation to assess the extent to which too-big-to-fail reforms are reducing the systemic and moral hazard risks associated with systemically important banks. The FSB will also continue its work to address unintended, negative effects of fragmentation started under the previous G20 presidency.

  • Implementation monitoring. Finalising post-crisis reforms and monitoring their effective implementation remains a priority. Much of the new financial regulatory framework called for by the G20 is largely in place, but implementation is not complete. The FSB will deliver its annual report on progress in implementation ahead of the G20 Summit.

Call for papers: 2020 Annual Meeting of the Central Bank Research Association (CEBRA)

12 February 2020

The FSB invites academic paper submissions for a session on the topic of ‘Evaluating the Effects of Too-Big-To-Fail Reforms’ at the 2020 Annual Meeting of CEBRA. The conference is jointly organised with the Centre For Macroeconomics at The London School of Economics and Political Science (LSE) and the Bank of England, and in association with the Leibniz Institute for Financial Research (SAFE). It will take place in London on 1-3 September 2020.

The FSB is conducting post-implementation evaluations of the effects of G20 financial regulatory reforms based on its evaluation framework. The framework guides analyses of whether the reforms are achieving their intended outcomes, and helps identify any material unintended consequences that may have to be addressed, without compromising on the objectives of the reforms.

The FSB is currently evaluating the effects of too-big-to-fail (TBTF) reforms for systemically important banks (SIBs). These reforms, agreed by the G20 in the aftermath of the global financial crisis, comprise higher loss-absorbency requirements; more intensive supervision; and policies to put in place effective resolution regimes and resolution planning to improve the resolvability of those banks’ structures and operations. The evaluation is assessing whether the implemented reforms are reducing the systemic and moral hazard risks associated with SIBs. It is also examining the broader effects of these reforms on the functioning of the financial system and the economy.

Authors are invited to submit papers that examine the effects of TBTF reforms for SIBs. In particular, papers would cover one or more of the following areas:

  1. To what extent are TBTF reforms achieving their objectives? Are they reducing the systemic and moral hazard risks associated with SIBs? Are they enhancing the ability of authorities to resolve systemic banks in an orderly manner and without exposing taxpayers to loss, while maintaining continuity of their critical economic functions?

  2. Do the effects of these reforms differ by type of bank (e.g. global vs domestic SIBs) or jurisdiction? If so, what might explain these differences?

  3. What have been the broader effects of these reforms on the resilience and structure of the financial system, the functioning of financial markets, global financial integration, or the cost and availability of financing?

Papers should be submitted via the SAFE website by Tuesday 3 March 2020.