June 25, 2019

FSB published a summary progress report on implementation of the G20 financial regulatory reforms. The report has been delivered to the G20 Leaders, ahead of the Summit in Osaka from June 28-29, 2019. The report finds that the new financial regulatory framework, which the G20 had called for, is now largely in place. The report includes a table showing the implementation status (as of June 2019) across FSB jurisdictions for core reform areas, including changes since the November 2018 G20 Summit.

The report highlights that these reforms make the financial system more resilient and reduce the likelihood and severity—and associated public cost—of future financial crises. However, despite continued progress, implementation is not complete and remains uneven across reform areas. The challenges in meeting the agreed dates relate to domestic legislative or rule-making processes; concerns over the pace of implementation in other jurisdictions; and difficulties faced by regulated entities in adjusting to the new requirements. It is critical to maintain momentum and avoid complacency, to achieve the goal of greater resilience. The report calls for the continued support of G20 Leaders in implementing the agreed reforms. Implementation progress across the four core reform areas is as follows:

  • Building resilient financial institutions—The report highlights that regulatory adoption of core Basel III elements has generally been timely, though implementation of some standards is behind schedule.
  • Ending too-big-to-fail—The report mentions that implementation of policy framework has advanced the most for global systemically important banks (G-SIBs). However, substantial work remains in achieving effective resolution regimes and operationalizing plans for systemically important banks and non-bank financial institutions.
  • Making derivatives markets safer—Overall, good progress has been made to date across over-the-counter (OTC) derivatives market reforms, though only one jurisdiction has reported further implementation progress since 2018.
  • Enhancing resilience of non-bank financial intermediation (NBFI)—Implementation of reforms to strengthen oversight and regulation of NBFI remains at an earlier stage when compared to the other areas, partly reflecting the later implementation deadlines.

FSB continues to evaluate the effects of reforms and will identify and deliver adjustments, where appropriate, without compromising on financial resilience. The next full progress report on implementation and effects of reforms will be delivered to the G20 and published in October 2019.

 

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Keywords: International, Banking, Securities, Basel III, G-SIBs, G20, Progress Report, Too Big to Fail, NBFI, OTC Derivatives, FSB

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