Featured Product

    FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks

    April 06, 2021

    FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021. The letter discusses the optimal approach for withdrawal of COVID-19 support measures, the significant progress made on too-big-to-fail (or TBTF) reforms for banks, and the importance of addressing issues related to climate change. FSB also published a report that considers the extension, amendment, and expiration of the COVID-19 support measures through the lens of financial stability and the capacity of the financial system to finance growth.

    The report on COVID support measures discusses the extent to which these measures have been unwound so far and the matters to which policymakers should have regard when considering whether to extend, amend, or end their economic and financial support measures. The report is intended to assist G20 members and other policymakers by providing a benchmark and drawing attention to the practices in FSB member jurisdictions. The report notes that, as public support is phased out, the ability of banks and non-bank financial institutions to bear risks and provide financing will be critical, not least because many viable but highly indebted firms will need to deleverage and boost their equity. Banks need to monitor the financial health of their borrowers, as support measures such as debt moratoria are extended, and to provision appropriately for impaired loans. Supervisors need to continue to find the right balance of flexibility and sound credit risk management. However, further work is needed to understand the risk of harmful cross-border and cross-sector spillovers, including possible feedback loops, and options to mitigate the risk. Simulations and stress testing are also proving to be useful analytical tools.

    In the letter to G20 leaders, the FSB Chair notes that an evaluation of the too-big-to-fail reforms for banks points to a significant progress in this area and that these reforms reduced systemic risks, enhanced the credibility of resolution and market discipline, and ultimately produced net benefits to society. The evaluation also identified areas in which to-big-to-fail reforms can be further developed and these areas include implementation of Total Loss Absorbing Capacity (TLAC) and transparency of resolution funding mechanisms. The letter states, that, with respect to addressing issues related to climate change, three climate-related workstreams are underway at FSB, covering data, disclosures, and regulatory and supervisory practices. In July, FSB will provide the G20 with two reports, on ways to promote consistent, high-quality climate disclosures in line with the recommendations of the Task Force for Climate-related Financial Disclosures and on the data necessary for the assessment of financial stability risks and related data gaps. This summer, FSB will also present to G20 a coordinated, forward-looking roadmap to address climate-related financial risks and to promote rapid progress among jurisdictions. To enable better coordination, FSB invited NGFS to participate in FSB climate-related work and FSB plans to apply for observer status in the NGFS. 

     

    Related Links

    Keywords: International, Banking, COVID-19, TCFD, Credit Risk, G20, Too Big to Fail, NGFS, Roadmap, Disclosures, Sustainable Finance, Climate Change Risk, TLAC, FSB

    Featured Experts
    Related Articles
    News

    EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    EBA Updates Lists of Entities for Use in Capital Calculations under SA

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    MAS Amends Notice on Related Party Transactions of Banks

    MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.

    April 08, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Euro Short-Term Rate

    ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.

    April 07, 2021 WebPage Regulatory News
    News

    EBA Consults on Standards Related to FRTB-SA

    EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).

    April 07, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules Related to IRB Approach for Credit Risk

    PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.

    April 07, 2021 WebPage Regulatory News
    News

    BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK

    The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks

    OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.

    April 06, 2021 WebPage Regulatory News
    News

    EU Amends CRR and Securitization Regulation in Response to Pandemic

    To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).

    April 06, 2021 WebPage Regulatory News
    News

    HM Treasury Announces G7 Agreement on Green Agenda Ahead of COP26

    HM Treasury announced that G7 Finance Ministers and Central Bank Governors met ahead of COP 26, the 2021 UN Climate Change Conference, and agreed on green agenda.

    April 06, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6826