28 March 2019 | PDF full text (187 KB)
FSB Chair Randal K. Quarles spoke at a conference on financial intermediation, regulation and economic policy hosted by the European Central Bank and Journal of Money, Credit and Banking in Frankfurt.
26 March 2019
On 25 February 2019, the FSB invited feedback on the effects of financial regulatory reforms on SME financing. Interested parties were invited to provide written comments by 18 March 2019. The public comments received are available below.
The feedback will be considered by the FSB as it prepares the draft report for its SME evaluation, which will be issued for public consultation ahead of the June 2019 G20 Summit. The final report, reflecting the feedback from the public consultation, will be published in October 2019.
15 March 2019 | PDF full text (264 KB)
This letter from the Co-chairs of the FSB’s Official Sector Steering Group (OSSG) encourages the International Swaps and Derivatives Association (ISDA) to continue its work on derivatives contractual robustness to risks of interest rate determination. The letter raises three important issues that the OSSG believes ISDA is moving to address:
The letter encourages ISDA to ask for market opinion on the events that would trigger a move to the spread-adjusted fallback rate for derivatives referencing IBORs. Triggers that would only take effect on the date on which LIBOR permanently or indefinitely stopped publication could leave those with LIBOR-referencing contracts still exposed to a number of risks. The OSSG also understands that ISDA intends to consult on USD LIBOR, CDOR, HIBOR and SOR in early 2019, and the OSSG strongly supports this. The OSSG Co-chairs also encourage ISDA to consult on the key technical details that ISDA’s Board Benchmark Committee will need to decide on before implementation can begin.
The FSB and member authorities through the OSSG are working to implement and monitor the recommendations of the 2014 FSB report Reforming Major Interest Rate Benchmarks.
Since July 2016, ISDA has undertaken work, at the request of the OSSG, to strengthen the robustness of derivatives markets to the discontinuation of widely-used interest rate benchmarks. The OSSG engages regularly with ISDA and other stakeholders with a view to their taking action to enhance contractual robustness in derivatives products and cash products, such as loans, mortgages and floating rate notes.
8 March 2019 | PDF full text (238 KB)
This note provides key takeways from a workshop with banks in October 2018 about implementation of the FSB’s international standards on compensation. As part of its work to monitor implementation of its Principles for Sound Compensation Practices and their Implementation Standards the FSB engages regularly with firms across financial sectors to assess the extent to which the standards have been effectively implemented. This workshop focused on:
Big picture – a decade on from the crisis – the baseline for banks before reforms, how compensation structures have changed since the crisis and thoughts on further changes in the coming years.
Implementation by banks of the FSB’s Principles and Standards on compensation – the practical steps banks have taken to implement reforms on compensation practice including details on which individuals are designated as material risk takers.
Effectiveness – steps banks are taking to assess the effectiveness of current compensation policies and practices in terms of better aligning risk and reward.
Executives responsible for managing processes related to compensation at 17 large internationally active banks and officials from the FSB Compensation Monitoring Contact Group participated in the workshop.
The workshop provides one input into the FSB’s biennial compensation progress report that will be published later in 2019.
The FSB welcomes any feedback on topics discussed at the workshop and summarised in this note. Comments should be sent by Tuesday 7 May 2019 to [email protected].
27 February 2019
The Application Paper on Proactive Supervision of Corporate Governance supports the practical application of the corporate governance related ICPs, mainly ICP 7 (Corporate Governance) and ICP 8 (Risk Management and Control Functions).
This Application Paper sets out good practices related to the organisation and functioning of the supervisor, with the objective of promoting proactive supervision of corporate governance. It aims to raise awareness of, and seeks to address, the organisational, cultural, and procedural challenges faced by supervisors in detecting problems in corporate governance and taking appropriate steps at an early stage.
The Application Paper also recognises that there is no “one-size-fits-all” approach to proactive supervision given the variety of organisational and governance structures among insurers. As suggested in the Application Paper, proactive supervision should be carried out proportionately to the issues identified, using an approach customised to the circumstances, including relevant supervisory objectives, laws and regulations.
25 February 2019 | PDF full text (190 KB)
The FSB organised a roundtable in Amsterdam on 12 December 2018 to exchange views with stakeholders on recent trends and drivers in small- and medium-sized enterprise financing across FSB jurisdictions, including the possible effects that financial regulatory reforms may have had on this market. This note summarises the main points raised in the roundtable.
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Ref no: 4/2019
The Financial Stability Board (FSB) is seeking feedback from stakeholders for its evaluation of the effects of financial regulatory reforms on the provision of financing to small and medium-sized enterprises (SMEs). The evaluation forms part of a broader FSB examination of the effects of post-crisis reforms on financial intermediation. More details on the evaluation and a summary of the views expressed by some stakeholders can be found in the note with the key takeaways of a roundtable held by the FSB on this topic in December 2018.
As part of this evaluation, the FSB invites feedback from stakeholders including SMEs, financial institutions and trade associations on the following issues:
What have been the main trends in SME financing (i.e. types of financing, volumes, prices and maturities) since the financial crisis? How do these trends differ across jurisdictions (e.g. advanced vs emerging market economies) and sectors (e.g. high-tech vs traditional firms), as well as by firm size (micro vs small vs medium-sized firms) and age (e.g. start-ups vs mature firms)?
What have been the main drivers of the observed trends in SME financing in recent years? How do they differ across jurisdictions, sectors, size and age of firms?
Have financial regulatory reforms such as Basel III affected bank financing to SMEs (e.g. in terms of loan volumes, prices, maturities and collateralisation)? If so, how? How important have been their effects vis-à-vis other types of bank lending and compared to the main drivers identified in question 2?
How does the impact (if any) of financial regulatory reforms vary across banks operating in different geographies and with different size and business models?
What other G20 financial reforms or other domestic financial regulations (if any) may have impacted financing to SMEs and how?
Have financial reforms prompted a shift in the provision of SME financing, e.g. between banks and other financial institutions (substitution effects)? If so, how?
Are there any other issues or relevant factors that should be considered as part of the evaluation?
Feedback, including evidence in support of the responses, should be submitted by 18 March 2019 to [email protected] under the subject heading “SME financing evaluation”. Responses will be published on the FSB’s website unless respondents expressly request otherwise. The feedback will be considered by the FSB as it prepares the draft report, which will be issued for public consultation ahead of the June 2019 G20 Summit. The final report, reflecting the feedback from the public consultation, will be published in October 2019.
Following the global financial crisis, the G20 launched a comprehensive programme of financial reforms to increase the resilience of the global financial system, while preserving its open and integrated structure. With the main elements of the post-crisis reforms agreed and implementation underway, an analysis of the effects of these reforms is becoming possible. To that end, the FSB published in July 2017 a framework for the post-implementation evaluation of the effects of the G20 financial regulatory reforms.
One of the first two evaluations under the Framework is an examination of the effects of the G20 regulatory reforms on financial intermediation, which is chaired by Klaas Knot (President of De Nederlandsche Bank). The motivation for this evaluation stems from the need to better understand the effects of those reforms on the financing of real economic activity, and hence their contribution to the G20 objective of strong, sustainable, balanced and inclusive economic growth. The evaluation consists of two parts: the first part, published in November 2018, examined the effects of reforms on the financing of infrastructure investment. The second part involves an evaluation of the effects of reforms on the financing of SMEs.
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, De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.
18 February 2019 | PDF full text (125 KB)
The Financial Stability Board (FSB) is taking forward the evaluation of financial reforms under its framework for the post-implementation evaluation of the effects of the G20 financial regulatory reforms. It will launch shortly an evaluation under the framework to examine the effects of too-big-to-fail (TBTF) reforms. This will be carried out by a working group of experts from FSB members, chaired by Claudia Buch, Vice-President of the Deutsche Bundesbank.
The evaluation will examine the extent to which TBTF reforms that have been implemented to date are achieving their intended objectives, and help identify any material unintended consequences that may have to be addressed, without compromising on the objectives of the reforms. Specifically, the evaluation will explore whether the reforms have: (i) addressed the systemic and moral hazard risks associated with systemically important banks; and (ii) analyse broader effects on the financial system, such as with respect to overall resilience, the orderly functioning of markets, global financial integration, or the cost and availability of financing.
The FSB seeks to appoint three academic subject matter experts from March 2019 until the evaluation’s completion in late 2020. These experts will support the TBTF evaluation team in the design of methodological approaches, data collection and use, empirical and other analyses of effects, and interpretation of the findings. This involves providing input on analytical issues, reviewing draft report write-ups and participating in team meetings and calls. It is envisaged that the total amount of work during this period will be around 20-25 days equivalent, with the bulk of it expected to take place between mid-2019 and mid-2020. The FSB will pay an honorarium commensurate to the time devoted to this role and cover associated travel expenses.
The selected academics should have demonstrated research knowledge and analytical expertise, including a strong publication record, in some or all of the following areas:
Empirical analysis of the effects of TBTF policies on banks (such as on implicit funding subsidies, bank behaviour and risk characteristics) and familiarity with the relevant literature, databases and econometric techniques.
Empirical analysis on the effects of financial regulations on financial system resilience (e.g. assessing systemic risk in the banking sector and cross-sectoral spillovers), global financial integration and cross-border spillovers, the functioning of markets, the provision of financing, and overall economic output and welfare.
Familiarity with international financial standards and the policy, legal or operational aspects of the regulation, supervision or resolution of systemically important banks.
Candidates for academic advisors are being solicited through this public call and from FSB members. The FSB will review candidates and select the academic advisors in March 2019.
Nominations (expressions of interest and a CV) should be submitted to the FSB at [email protected] with “Academic call – TBTF evaluation” in the subject line by 8 March 2019. For more information, please contact the FSB Secretariat ([email protected]; [email protected]).
15 February 2019
FSB Secretary General Dietrich Domanski spoke with the Institute of International Finance about the FSB’s 2019 work programme including work on central counterparties, evaluating the effects of reforms, FinTech and efforts to further strengthen engagement with external stakeholders.
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