FSB Examines Implementation of Resolution Regimes in Financial Sector
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions and sets out plans for further work. The report also presents the status of implementation of aspects of bank resolution regimes by FSB jurisdictions, along with the planned actions and timelines going forward. The report reveals that significant progress has been achieved; however, progress is uneven across reform areas and sectors and there is need to be mindful of remaining gaps. The report concludes that authorities and firms need to be mindful of the remaining gaps as they work toward making resolution strategies and plans operational in all sectors.
This report, which has been prepared by the FSB Resolution Steering Group or ReSG, is the eighth report on the implementation of resolution reforms. It takes stock of progress made by FSB members in implementing reforms and summarizes findings from the monitoring of resolvability across the banking, insurance, and financial market infrastructure sectors. It discusses progress in implementing the resolution policies of FSB for banks, insurers, and central counterparties or CCPs. It also examines the initiatives in monitoring implementation and evaluating the effects of resolution reforms and presents actions and timelines going forward. Annex 1 to the report presents the status of implementation of aspects of bank resolution regimes by FSB jurisdictions, as of September 2019. The status is based on self-reporting by national authorities. The availability of legal frameworks and regimes in jurisdictions does not mean that resolution will necessarily be effective, nor does the absence of such powers necessarily mean that a jurisdiction will not be able to achieve an effective resolution.
With respect to the banking sector, the report highlights that global systemically important banks have been made more resolvable through the build-up of total loss-absorbing capacity, or TLAC, and other measures. Notwithstanding this progress, challenges remain. Authorities need to determine the appropriate balance between group-internal distribution of Total loss-absorbing capacity and non-pre-positioned resources. Furthermore, access to temporary liquidity in relevant currencies and in adequate amounts when and where needed is critical for firms going through resolution and requires ex ante preparation by firms and authorities.
In the insurance sector, over the past year, two jurisdictions (Netherlands and Singapore) have introduced or strengthened powers to resolve insurers. Resolvability monitoring highlighted the challenges stemming from group-internal interconnectedness. Ongoing work on resolution planning focuses on intragroup funding, intragroup reinsurance, centralized cash pooling, intragroup guarantees, and operational interconnections. Additionally, work on resolution funding encompasses temporary sources of funding and interactions with any existing policyholder protection schemes, information-sharing, and communication.
A policy priority for the FSB is the further strengthening of the resilience and resolvability of central counterparties. The continuing work on financial resources and tools to support orderly resolution will lead to further guidance, on which the FSB will publicly consult during the second quarter of 2020. FSB is developing this guidance in consultation with CPMI and IOSCO. This work draws on the experience of authorities and Crisis Management Groups in assessing the quality and quantity of resources for resolution and on the comments received from stakeholders in response to the public consultation. The future guidance should help authorities and Crisis Management Groups in adopting a structured process for evaluating the adequacy of resources to support resolution on a CCP-specific basis and, if necessary, addressing the need for any additional resources considering a reasonable range of scenarios. It should also assist authorities and Crisis Management Groups in their analysis of the treatment of central counterparty equity.
Related Links
Keywords: International, Banking, Insurance, Securities, FMI, CCPs, Resolution Regime, Resolution Framework, Crisis Management, Systemic Risk, SIFI, FSB
Featured Experts

Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
ESAs Publish Draft Amendments to Bilateral Margin RequirementsRelated Articles
EBA Examines Supervisory Practices, Issues Deposits Reporting Template
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
US Agency Publications Address Basel, Reporting, and CECL Developments
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
SEC Extends Comment Period on Climate Risk Disclosures
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
APRA Reduces Committed Liquidity Facility, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
EIOPA Responds to Stakeholder Views on Blockchain in Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.
HKMA Announces Decisions on CCyB and Loan Guarantee Scheme
The Hong Kong Monetary Authority (HKMA) announced that the applicable jurisdictional countercyclical capital buffer (CCyB) ratio for Hong Kong remains unchanged at 1.0%
CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.