FSB Chair reports to G20 Finance Ministers and Central Bank Governors

13 October 2019

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Ref no: 33/2019

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 Washington D.C. this week.

The letter notes that the development of post-crisis reform policies is nearly complete and implementation is well underway. Yet it emphasises that the FSB’s mission is far from complete. Implementation progress on agreed G20 reforms remains uneven across key reform areas, and the FSB is in the process of evaluating that reforms are working as intended. Looking ahead, authorities need to be ready to address evolving risks to global financial stability, be they related to current downside risks to growth and uncertainties around Brexit, or structural changes in the financial system.

The letter highlights three areas of the FSB’s work:

  • Ensuring resilience in the face of new risks. Increasing risks meet a financial system that is much more resilient than it was before the financial crisis. However, the long period of sustained global growth and rising asset prices may have weakened the incentives to take precautions against unforeseen events. The FSB is conducting an in-depth analysis of the markets for leveraged loans and collateralized loan obligations. The FSB is also assessing the financial stability implications of structural changes in the financial system, including non-bank finance and technological innovation.
  • Potential financial stability issues from global stablecoins. Stablecoin projects of potentially global reach and magnitude must meet the highest regulatory standards and be subject to prudential supervision and oversight. Possible regulatory gaps should be assessed and addressed as a matter of priority. The FSB has formed a working group, to inform regulatory policy approaches that harness the benefits of financial innovation, while containing associated risks for the financial system, and advise on multilateral responses as necessary. The FSB will submit a consultative report to the G20 in April and a final report in July 2020.
  • Promoting a financial system that supports strong and sustainable global growth. Following its June report on addressing instances of harmful market fragmentation the FSB has submitted a progress report to the G20 on its further work in this area. The FSB is also taking forward its multi-year programme of rigorous evaluation of post-crisis reforms. The evaluation of the effects of those reforms on small and medium-sized enterprises, is nearing completion, while the evaluation of the effects of too-big-to fail reforms for banks is underway.

Notes to editors

The FSB will publish its annual report on implementation and effects of the G20 financial regulatory reforms on 16 October.

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, 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: October 2019

| PDF full text (222 KB)

This letter from the FSB Chair was delivered to G20 Finance Ministers and Central Bank Governors ahead of their meetings in Washington D.C. in October. The letter highlights three areas of the FSB’s work:

  • Ensuring resilience in the face of new risks. Increasing risks meet a financial system that is much more resilient than it was before the financial crisis. However, the long period of sustained global growth and rising asset prices may have weakened the incentives to take precautions against unforeseen events. The FSB is conducting an in-depth analysis of the markets for leveraged loans and collateralized loan obligations. The FSB is also assessing the financial stability implications of structural changes in the financial system, including non-bank finance and technological innovation.
  • Potential financial stability issues from global stablecoins. Stablecoin projects of potentially global reach and magnitude must meet the highest regulatory standards and be subject to prudential supervision and oversight. Possible regulatory gaps should be assessed and addressed as a matter of priority. The FSB has formed a working group, to inform regulatory policy approaches that harness the benefits of financial innovation, while containing associated risks for the financial system, and advise on multilateral responses as necessary. The FSB will submit a consultative report to the G20 in April and a final report in July 2020.
  • Promoting a financial system that supports strong and sustainable global growth. Following its June report on addressing instances of harmful market fragmentation the FSB has submitted a progress report to the G20 on its further work in this area. The FSB is also taking forward its multi-year programme of rigorous evaluation of post-crisis reforms. The evaluation of the effects of those reforms on small and medium-sized enterprises, is nearing completion, while the evaluation of the effects of too-big-to fail reforms for banks is underway.

The letter notes that the development of post-crisis reform policies is nearly complete and implementation is well underway. Yet it emphasises that the FSB’s mission is far from complete. Implementation progress on agreed G20 reforms remains uneven across key reform areas, and the FSB is in the process of evaluating that reforms are working as intended. Looking ahead, authorities need to be ready to address evolving risks to global financial stability, be they related to current downside risks to growth and uncertainties around Brexit, or structural changes in the financial system.

G20 Data Gaps Initiative (DGI-2): The Fourth Progress Report — Countdown to 2021

11 October 2019 | PDF full text (274 KB)

This report updates on the implementation of phase two of the G20 Data Gaps Initiative (DGI-2). The report was submitted to the G20 Finance Ministers and Central Bank Governors ahead of their meetings in Washington D.C. in mid-October.

In October 2009 the FSB and IMF published The Financial Crisis and Information Gaps, a report which responded to a request from the G20 Ministers and Governors to explore information gaps and provide appropriate proposals for strengthening data collection. The report, which set out a series of recommendations to address identified data gaps, was endorsed by G20 Ministers and Governors and led to the first phase of work (DGI-1). In September 2015 it was agreed that the DGI work should continue into a second phase.

Data gaps limit the ability of policymakers and market participants to assess financial stability risks and economic developments in a timely and accurate manner. Addressing these gaps has been an important priority for the G20 economies. This fourth progress report of the second phase of the G20 Data Gaps Initiative (DGI-2) provides an overview of the progress since September 2018 and the challenges that remain in implementing the DGI-2 recommendations by the 2021 deadline.

The main objective of DGI-2 is to implement the regular collection and dissemination of reliable and timely statistics for policy use. DGI-2 also includes new recommendations to reflect evolving policymaker needs. Its twenty recommendations are clustered under three main headings: (i) monitoring risk in the financial sector; (ii) vulnerabilities, interconnections and spillovers; and (iii) data sharing and communication of official statistics. DGI-2 maintains continuity with the DGI-1 recommendations while setting more specific objectives for G20 economies to compile and disseminate minimum common datasets for these recommendations.

The report highlights that:

  • Participating economies made additional progress in closing the identified data gaps and promoting the regular flow of timely and reliable statistics for policy use. Overall improvements were noted in coverage, timeliness, or periodicity of: securities statistics, derivatives data, sectoral accounts, international investment position, international banking statistics, and government finance statistics.
  • Challenges remain in fully implementing the DGI-2 recommendations by 2021. While substantial achievements have been made in promoting data sharing, continued efforts are still needed. Retaining high-level political support is essential to overcome remaining challenges.
  • To facilitate full implementation of the agreed DGI-2 recommendations, the IMF staff and the FSB Secretariat, in close cooperation with the Inter-Agency Group on Economic and Financial Statistics (IAG), will continue to monitor progress on the DGI-2.

The IMF Staff and FSB Secretariat will report back to G20 Finance Ministers and Central Bank Governors in the second half of 2020.

FSB and IMF publish 2019 Progress Report on G20 Data Gaps Initiative

Press enquiries:
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Ref no: 32/2019

The Financial Stability Board (FSB) and International Monetary Fund (IMF) today published the Fourth Progress Report – Countdown to 2021 on the implementation of the Second Phase of the G20 Data Gaps Initiative (DGI-2). The report will be submitted to the G20 Finance Ministers and Central Bank Governors ahead of their meetings in Washington D.C. in mid-October.

Data gaps limit the ability of policymakers and market participants to assess financial stability risks and economic developments in a timely and accurate manner. Addressing these gaps has been an important priority for the G20 economies. This report provides an overview of the progress since September 2018 and the challenges that remain in implementing the DGI-2 recommendations until the final deadline of 2021.

The report highlights that:

  • Participating economies made additional progress in closing the identified data gaps and promoting the regular flow of timely and reliable statistics for policy use. Overall improvements were noted in coverage, timeliness, or periodicity of: securities statistics, derivatives data, sectoral accounts, international investment position, international banking statistics, and government finance statistics.

  • Challenges remain in fully implementing the DGI-2 recommendations by 2021. While substantial achievements have been made in promoting data sharing, continued efforts are still needed. Retaining high-level political support is essential to overcome remaining challenges.

  • To facilitate full implementation of the agreed DGI-2 recommendations, the IMF staff and the FSB Secretariat, in close cooperation with the Inter-Agency Group on Economic and Financial Statistics (IAG), will continue to monitor progress on the DGI-2. Bilateral technical assistance and technical workshops will be conducted. The annual DGI Global Conference scheduled in mid-2020 will monitor the results achieved.

  • The IMF Staff and FSB Secretariat will report back to G20 Finance Ministers and Central Bank Governors in the second half of 2020.

Notes to editors

In October 2009 the FSB and IMF published The Financial Crisis and Information Gaps, a report which responded to a request from the G20 Ministers and Governors to explore information gaps and provide appropriate proposals for strengthening data collection. The report, which set out a series of recommendations to address identified data gaps, was endorsed by G20 Ministers and Governors and led to the first phase of work (DGI-1). In September 2015 it was agreed that the DGI work should continue into a second phase
(DGI-2).

The main objective of DGI-2 is to implement the regular collection and dissemination of reliable and timely statistics for policy use. DGI-2 also includes new recommendations to reflect evolving policymaker needs. Its twenty recommendations are clustered under three main headings: (i) monitoring risk in the financial sector; (ii) vulnerabilities, interconnections and spillovers; and (iii) data sharing and communication of official statistics. DGI-2 maintains continuity with the DGI-1 recommendations while setting more specific objectives for G20 economies to compile and disseminate minimum common datasets for these recommendations.

The member agencies of the Inter-Agency Group on Economic and Financial Statistics (IAG), are the Bank for International Settlements, European Central Bank, Eurostat, IMF (Chair), Organisation for Co-operation and Economic Development, United Nations and the World Bank. The FSB participates in the IAG meetings.

For further information on the FSB, visit www.fsb.org

For further information on the IMF, visit www.imf.org

FSB publishes UPI governance arrangements

9 October 2019

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Ref no: 31/2019

The Financial Stability Board (FSB) has today published a report on the governance arrangements for the globally harmonised Unique Product Identifier (UPI).

The UPI will uniquely identify the product involved in over-the-counter (OTC) derivatives transactions reported to trade repositories. This will help authorities to aggregate data on OTC derivatives transactions by product. Such aggregation will facilitate the effective use of OTC derivatives trade reporting data to help authorities assess systemic risk and detect market abuse. It will therefore deliver one of the key objectives of the G20 reforms to OTC derivatives markets.

The Legal Entity Identifier Regulatory Oversight Committee (LEI ROC) is best positioned to become the International Governance Body for the UPI and Unique Transaction Identifier (UTI) and critical other elements other than UTI and UPI (CDE), provided that the LEI ROC makes appropriate adjustments to its existing governance to make it fit for purpose for these identifiers. The FSB takes this decision in coordination with the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO), which were tasked to develop governance arrangements for the CDE. In the interim, the FSB will take on the functions that have been allocated to the International Governance Body.

The FSB also recommends that jurisdictions undertake necessary actions to implement the UPI Technical Guidance and that these take effect no later than the third quarter of 2022.

Notes to editors

G20 Leaders agreed at the Pittsburgh Summit in 2009, as part of a package of reforms to the OTC derivatives markets, that all OTC derivatives transactions should be reported to trade repositories. A lack of transparency in these markets was one of the key problems identified by the financial crisis. Trade reporting, by providing authorities with data on trading activity, is a key part of efforts to identify and address financial stability risks from these markets.

The final report of the FSB’s Feasibility study on approaches to aggregate OTC derivatives data published in September 2014 recommended a number of key preparatory steps that should be undertaken to enable effective global aggregation of OTC derivatives trade reporting data. One of these preparatory steps is harmonisation of important data elements reported to trade repositories, including the creation of a UPI and UTI, and the global introduction of a Legal Entity Identifier (LEI).

The FSB announced in May 2019 that it had designated The Derivatives Service Bureau (DSB) Ltd as the service provider for the future UPI system

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

Governance arrangements for the UPI

| PDF full text (433 KB)

This report sets out governance arrangements for the globally harmonised Unique Product Identifier (UPI).

G20 Leaders agreed at the Pittsburgh Summit in 2009, as part of a package of reforms to the over-the-counter (OTC) derivatives markets, that all OTC derivatives transactions should be reported to trade repositories. A lack of transparency in these markets was one of the key problems identified by the financial crisis. Trade reporting, by providing authorities with data on trading activity, is a key part of efforts to identify and address financial stability risks from these markets. The UPI will uniquely identify the product involved in OTC derivatives transactions reported to trade repositories. This will help authorities to aggregate data on OTC derivatives transactions by product. Such aggregation will facilitate the effective use of OTC trade reporting data, including helping authorities assess systemic risk and detect market abuse. It will therefore deliver one of the key objectives of the G20 reforms to OTC derivatives markets.

The final report of the FSB’s Feasibility study on approaches to aggregate OTC derivatives data published in September 2014 recommended a number of key preparatory steps that should be undertaken to enable effective global aggregation of OTC derivatives trade reporting data. One of these preparatory steps is harmonisation of important data elements reported to trade respositories, including the creation of a UPI and Unique Transaction Identifier (UTI) and the global introduction of a legal entity identifier (LEI).

The Legal Entity Identifier Regulatory Oversight Committee (LEI ROC) is best positioned to become the International Governance Body  for the UPI and UTI and critical other elements (CDE) other than UTI and UPI. The FSB takes this decision in coordination with the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO), which were tasked to develop governance arrangements for the CDE. In the interim, the FSB will take on the functions that have been allocated to the International Governance Body.

The FSB also recommends that jurisdictions undertake necessary actions to implement the UPI Technical Guidance and that these take effect no later than the third quarter of 2022.

Governance Arrangements for critical OTC derivatives data elements (other than UTI and UPI)

View the Standard: CPMI | IOSCO

The G20 Leaders agreed in 2009 that all over-the-counter (OTC) derivative transactions should be reported to trade repositories (TRs) to further the goals of improving transparency, mitigating systemic risk and preventing market abuse. Aggregation of the data being reported across TRs will help authorities to obtain a comprehensive view of the OTC derivatives market and its activity. Such aggregation is feasible if “the work on standardisation and harmonisation of important data elements [is] completed”.

The CPMI and IOSCO have published technical guidance to harmonise the Unique Transaction Identifier (UTI), the Unique Product Identifier (UPI) and other critical OTC derivatives data elements (CDE) that may be reported to TRs.

The guidance on governance arrangements for CDE other than UPI and UTI promotes oversight and maintenance of the CDE.