FSB Workshop Discusses Preliminary Findings of Too-Big-To-Fail Reforms
FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms. FSB has published the workshop agenda and the related presentation documents, one of which is the presentation given by Claudia Buch on the preliminary findings of the too-big-to-fail evaluation. Claudia M. Buch is the Vice President of Deutsche Bundesbank and Chair of the FSB evaluation working group on the effects of too-big-to-fail reforms. Ms. Buch highlighted that the indicators of systemic risk and moral hazard have moved in the right direction post the reforms but there are still gaps that need to be addressed.
Ms. Buch highlighted that capital ratios of systemically important banks increased by more than those of other banks but their profitability has fallen relative to other banks, reflecting higher capital, lower risk, and higher funding costs. Moreover, the complexity of global banks remains high. Overall, the implementation of resolution reforms has progressed and stakeholders consider resolution to be more credible. However, there are still gaps to be addressed. Obstacles to resolution can be reduced further, as state support for failing banks has continued and resolution of central counterparties is work in progress. In addition, information transparency and monitoring can be enhanced. All stakeholders would benefit from closing information gaps. Risks from shift to non-bank financials also need to be monitored.
As part of its program to examine the effects of post-crisis financial reforms agreed by G20, FSB is carrying out an evaluation of too-big-to-fail reforms for banks. The evaluation is being chaired by Ms. Buch and is assessing whether the implemented reforms are reducing the systemic and moral hazard risks associated with systemically important banks. It is also examining the broader effects of the reforms to address too-big-to-fail for systemically important banks on the overall functioning of the financial system. In June 2020, FSB consulted on a report setting out the preliminary results of the evaluation. The deadline for providing feedback on the consultation report is September 30, 2020. This recent virtual workshop included presentations and discussions by a range of academic, regulatory, non-governmental organization and industry stakeholders on the analysis and findings of the evaluation. The workshop and the written responses to the consultation will inform the final evaluation report, which will be published in early 2021.
Related Links
Keywords: International, Banking, To Big to Fail, Systemic Risk, Resolution Framework, D-SIBs, G-SIBs, FSB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
EBA Guide to Monitor Threshold for Intermediate Parent Undertakings
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
PRA Finalizes Approach to Supervision of International Banks
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
FCA Issues PS21/9 on Implementation of Investment Firms Regime
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
EBA Proposes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
IOSCO Proposes Recommendations on ESG Ratings and Data Providers
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
ESMA Group Issues Recommendations on RFR Switch in Interdealer Market
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
ECB Study Assesses Impact of Basel III Finalization Package
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
PRA Updates Remuneration Policy Statement Templates and Tables
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.
