FSB published a letter from the Chair Randal K. Quarles to the G20 finance ministers and Central Bank governors ahead of the meetings in Riyadh on February 22-23. The letter sets out key deliverables during the Saudi Arabian G20 Presidency. The key FSB priorities for 2020 will be related to the London Inter-bank Offered Rate (LIBOR) transition, certain key issues in the technological arena, regulatory issues around stablecoins, improvements in cross-border payments, and work in the area of non-bank financial intermediation, among others.
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, the focus areas for FSB’s work for the Saudi Arabian G20 include the following:
- FSB welcomes the increased G20 focus on the issue of LIBOR transition and will publish reports on this transition in July and December.
- Building on the work published last year, FSB will provide a report on the implications of the provision of financial services by bigtechs for emerging market and developing economies. The G20 Presidency has also asked FSB to submit a report on the range of practices in the use of regtech and suptech.
- 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.
- Recognizing the importance of efficient and inclusive payment services for global growth, the Saudi G20 Presidency has requested FSB to coordinate the development of a roadmap for improving cross-border payments. FSB will deliver this roadmap to the G20 in October.
- FSB is considering what work is appropriate and whether to reorganize the existing work on non-bank financial intermediation. This is due to the new vulnerabilities that may arise from growth in this sector. Non-bank financial intermediation now accounts for roughly half of the global financial assets.
- In June, FSB will publicly consult on its report on the evaluation of the post-crisis regulatory framework to assess the extent to which too-big-to-fail reforms are reducing the systemic and moral hazard risks associated with systemically important banks. FSB will also deliver its annual report on the progress in implementation of these reforms ahead of the G20 Summit.
Keywords: International, Middle East and Africa, Saudi Arabia, Banking, Bigtech, Suptech, Regtech, Stablecoins, G20, Benchmark Reforms, Regtech, Cyber Risk, Too Big to Fail, FSB
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