June 27, 2019

FSB published ten responses to the call for public feedback on the evaluation of too-big-to-fail, or TBTF, reforms for systemic banks. On May 23, 2019, FSB had published a call for feedback and a reference document, known as summary terms of reference, detailing the objectives, scope, and process of the evaluation of too-big-to-fail reforms. Feedback, including evidence in support of the responses, was to be submitted by June 21, 2019. FSB will consider the feedback it has received while preparing its draft report, which will be issued for public consultation in June 2020. The final report will be published by the end of 2020.

The evaluation, which is being conducted by a working group chaired by Claudia Buch (Vice-President of Deutsche Bundesbank), will assess whether the implemented reforms are reducing the systemic and moral hazard risks associated with the systemically important banks. It will also examine the broader effects of the reforms to address too-big-to-fail (for systemically important banks) on the overall functioning of the financial system. FSB had invited feedback—from banks, other financial institutions, academics, think tanks, industry, and consumer associations—on the following issues:

  • To what extent are too-big-to-fail reforms achieving their objectives, as described in the terms of reference? Are they reducing the systemic and moral hazard risks associated with systemically important banks?
  • Which types of too-big-to-fail policies (for example: higher loss absorbency, total loss-absorbing capacity, more intensive supervision, resolution and resolvability) have had an impact on systemically important banks and how? 
  • Is there any evidence that the effects of these reforms differ by type of bank (for example: global vs. domestic systemically important banks)?
  • What have been the broader effects of these reforms on financial system resilience and structure, the functioning of financial markets, the global financial integration, or the cost and availability of financing?
  • Have there been any material unintended consequences from the implementation of these reforms to date?
  • Any other issues related to the effects of too-big-to-fail reforms that have not been covered in the questions above.

 

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Keywords: International, Banking, Too Big to Fail, Systemic Risk, TLAC, Resolution, Crisis Management, Responses to Consultation, FSB

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