Featured Product

    Klaas Knot of FSB Outlines Its Regulatory and Supervisory Priorities

    April 30, 2019

    While speaking at an IMF-IIF (Institute of International Finance) meeting in Washington DC, the DNB President and FSB Vice Chair Klaas Knot discussed the future agenda for financial sector reforms, financial stability, and regulatory developments for the financial industry. After taking stock of the state of the international financial sector, Mr. Knot outlined the key technological changes that will shape the financial sector and the regulatory and supervisory priorities of FSB.

    Mr. Knot discussed important challenges to the current financial system in the from of Brexit and technological innovation in the form of fintech. He also highlighted that, through their direct and indirect exposures, financial institutions, including banks, face potential technological and policy shocks as a result of climate change. This is evident from the results of the climate stress test that the Dutch central bank conducted last year. While examining the challenges posed by fintech, he mentioned that such developments could lead to new operational risks, including the growing adoption of cloud services, which could lead to concentration and systemic risks. He added that technological innovation is leading to changes in the structure of the value chain of banking services, pressuring the existing business models. He then outlined various scenarios that can develop in this context namely integration of banks with fintech firms, new types of cooperation and partnerships between these firms, and increased competition as bigtechs might pose challenge to the existing banks. FSB carefully monitors and analyzes the effects of these technological developments, said Mr. Knot. 

    Next, the FSB Vice Chair examined regulatory implications of the growing role of the non-bank financial intermediaries in the financial system, highlighting that there are unanswered questions about potential systemic risks originating from the unregulated sector. "This may lead to a mispricing of risks, or new interconnections within the financial system. These structural trends will shape the financial landscape and the business model of banks," said Mr. Knot. Finally, he highlighted the following priorities that will determine the reform agenda for the financial sector over the coming years:

    • FSB will continue focus on effective implementation of the post-crisis G20 reforms. This includes efforts to minimize specific national elements that would undermine the level playing field and international harmonization. 
    • FSB will further enhance its role in risk identification. The Standing Committee on Assessment of Vulnerabilities will strengthen its surveillance framework to facilitate a structured and in-depth monitoring of potential risks to the global financial system. FSB will continue monitoring non-bank financial intermediation, which would benefit from enhanced data collection, improved risk analysis, and identifying appropriate policy measures.
    • FSB will continue its work on the evaluation of reforms, after policy measures have been given a reasonable amount of time to take effect. Policymakers can assess whether the reforms have achieved their intended goals and whether there are any unintended consequences. FSB is evaluating the impact of the reforms on small and medium enterprise (SME) financing, to determine whether the enhanced capital regulation has affected lending to SMEs. FSB also recently started an evaluation of the policies to address the too-big-to-fail banks.  This evaluation will look at the effects of higher risk buffers, intensified supervision, and the resolution framework to reduce the potential failure of systemic banks and enable an orderly resolution when necessary.
    • FSB will strengthen its outreach to non-member jurisdictions and strengthen its communication and transparency toward external stakeholders. Strengthening the consultation process and improving information-sharing would contribute to stronger stakeholder involvement, thus improving the work and understanding of international reforms.

     

    Related Link: Speech

    Keywords: International, Banking, Insurance, Securities, Fintech, Financial Stability, Bigtech, FSB Priorities, DNB, FSB, BIS

    Related Articles
    News

    FSB Sets Out Effective Practices for Cyber Incident Recovery

    FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.

    October 19, 2020 WebPage Regulatory News
    News

    HKMA Urges Early Action for Adherence to IBOR Fallbacks Protocol

    HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.

    October 16, 2020 WebPage Regulatory News
    News

    FSB Sets Out Roadmap for Transition to Alternative Reference Rates

    FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).

    October 16, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on BRRD2 Transposition

    HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).

    October 15, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on CRD5 Transposition

    HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.

    October 15, 2020 WebPage Regulatory News
    News

    BoE Publishes Reporting Schedule for Statistical Returns

    In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.

    October 15, 2020 WebPage Regulatory News
    News

    EC Welcomes Declaration by Member States on EU Cloud Federation

    EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.

    October 15, 2020 WebPage Regulatory News
    News

    PRA Updates Supervisory Statement on Counterparty Credit Risk

    PRA published the final policy statement PS22/20, which contains the updated supervisory statement SS12/13 on counterparty credit risk.

    October 14, 2020 WebPage Regulatory News
    News

    FSB Publishes Update on Work to Address Market Fragmentation

    FSB published an update on its work to address market fragmentation. FSB is working in this area in collaboration with the other standard-setting bodies.

    October 14, 2020 WebPage Regulatory News
    News

    EBA Proposes to Revise Guidelines on Incident Reporting Under PSD2

    EBA proposed revisions to the guidelines on major incident reporting under the second Payment Service Directive (PSD2).

    October 14, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5967