Featured Product

    FSB Report Examines Progress in Resolvability of Systemic Institutions

    November 18, 2020

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions. The report highlights the need for resolution preparedness and discusses lessons learned from the COVID-19 pandemic, which confirmed the importance of ongoing work on resolvability for banks, insurers, and central counterparties (CCPs). The report concludes that improved capabilities for monitoring the financial condition of firms and for cooperation and communication in a crisis, although not yet perfect, have served authorities well.

    In the banking sector, the sixth round of the resolvability assessment process conducted during 2019-2020 confirmed that crisis management groups are broadly satisfied with the progress of global systemically important banks (G-SIBs) toward resolvability.  Global systemically important banks (G-SIBs) are estimated to already meet the final 2022 minimum external total loss-absorbing capacity (TLAC) requirement. TLAC-eligible bond issuance has continued through the difficult COVID-19 pandemic environment and the market has, so far, absorbed issuance without difficulty. Disclosure of external TLAC levels by G-SIBs has improved over the past year. However, little information is available to market participants on the distribution of TLAC within banking groups. Work is ongoing on the management, distribution and transferability of these resources. The report identified some remaining obstacles to resolvability and gaps that to be addressed.

    In the insurance sector, FSB continues to monitor implementation of the Key Attributes. Progress on implementation of national insurance resolution regimes has slowed down, with no significant reforms, such as finalization of new or enhanced insurance resolution frameworks, reported in this recent cycle. The FSB Key Attributes Assessment Methodology (KAAM) for the insurance sector, which was published in August 2020, may also be a useful tool for a jurisdiction that is adopting a new resolution regime or reviewing, reforming, or making improvements to its existing regimes. A number of jurisdictions have identified systemically important insurers for purpose of recovery and resolution planning. Key areas of attention for FSB work on resolution planning for insurers are intra-group interconnectedness and funding in resolution. Furthermore, in the event of a 2022 decision to discontinue the global systemically important insurers (G-SIIs) list, FSB will review the scope of application of G-SII specific requirements in consultation with IAIS.

    Central counterparties are also increasing in importance, given that the recent periods of market turmoil have demonstrated the benefits that central clearing brings for global financial stability. CPMI and IOSCO coordinated a review, which qualified thirteen central counterparties as systemically important in more than one jurisdiction. Some progress has been made in resolution planning for systemically important central counterparties in more than one jurisdiction. Authorities have established crisis management groups and commenced resolution planning for all central counterparties identified as systemically important in more than one jurisdiction, with the exception of one central counterparty that was added to the list of systemically important central counterparties in more than one jurisdiction in the August review. To support discussions on central counterparty resolvability and adequacy of financial resources for resolution, FSB recently issued a guidance on financial resources to support central counterparty resolution and on the treatment of central counterparty equity in resolution. FSB also developed, in 2020, a resolvability assessment process questionnaire that will be used for the first time in the 2021 for central counterparties that systemically important in more than one jurisdiction. Summary findings from the 2021 central counterparty resolvability assessment process will be included in the 2021 resolution report of FSB. The Chairs of FSB, CPMI, IOSCO, and the FSB Resolution Steering Group agreed to collaborate on and conduct further work on central counterparty financial resources through their respective committees.

     

    Related Links

    Keywords: International, Banking, Insurance, FMI, COVID-19, Crisis Management Framework, CCPs, Resolution Planning, Resolution Framework, FSB

    Featured Experts
    Related Articles
    News

    EBA Sets Out Standards for Pillar 3 Disclosures of ESG Risks

    The European Banking Authority (EBA) published the final draft implementing technical standards on Pillar 3 disclosures on environmental, social, and governance (ESG) risks.

    January 24, 2022 WebPage Regulatory News
    News

    EBA Proposes Guidelines on Remuneration Benchmarking, High Earner Data

    The European Banking Authority (EBA) proposed to update the guidelines on the data collection exercise on high earners and the remuneration benchmarking exercise under the Capital Requirements Directive (CRD).

    January 21, 2022 WebPage Regulatory News
    News

    MAS Issues Updates on Its Activities: Ravi Menon Becomes NGFS Chair

    The Network for Greening the Financial System (NGFS) announced the appointment of Mr. Ravi Menon, the Managing Director of the Monetary Authority of Singapore (MAS), as its new Chair for a two-year term.

    January 21, 2022 WebPage Regulatory News
    News

    CBIRC Issues Rules on Related-Party Transactions and Outsourcing Risks

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules on related-party transactions and outsourcing risks.

    January 21, 2022 WebPage Regulatory News
    News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News
    News

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News
    News

    BIS Tests CBDC with Banks; FIS Examines Tech Firm Licensing Regime

    The Bank of International Settlements (BIS) announced successful test integration of wholesale central bank digital currency (CBDC) settlement with commercial banks, as part of the Project Helvetia.

    January 20, 2022 WebPage Regulatory News
    News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News
    News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News
    News

    HKMA Consults on FIRO Code, Revises Policy on Foreign Exchange Risk

    The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.

    January 18, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7912