FSB published the annual progress report on implementation of the FSB recommendations to reform major interest rate benchmarks. The report emphasizes that the continued reliance of global financial markets on LIBOR poses risks to financial stability; this calls for significant and sustained efforts by the official sector and by financial and non-financial firms across many jurisdictions to transition away from LIBOR by the end of 2021. The report covers progress from reforms to LIBOR, EURIBOR, TIBOR, USD, EUR, JPY, GBP, and CHF, in addition to the progress on the currencies in Australia, Brazil, Canada, Hong Kong, Indonesia, Mexico, Singapore, South Africa, and Turkey.
Interest rate benchmarks play a key role in global financial markets. In 2014, FSB recommended reforms for interbank offered rates (IBORs) in response to the cases of attempted manipulation and the decline in liquidity in key interbank unsecured funding markets. The report sets out progress on implementing the FSB recommendations and finds that:
- There is a common view across FSB jurisdictions that the use of overnight risk-free rates should be encouraged across global interest rates markets, where appropriate, and that contracts referencing IBORs should have robust fallbacks.
- There has been good progress in many derivatives and securities markets but transition in lending markets has been slower and needs to accelerate.
- Firms undertaking their transition away from LIBOR should not delay their programs until the emergence of possible forward-looking term versions of risk-free rates.
- The parallel efforts on transition across multiple jurisdictions and currencies are an opportunity to align conventions and other practices across currencies and products.
- Transition requires significant commitment from the official sector, working alongside market participants.
- Given the degree of risk arising from the continued reliance on LIBOR, regulated firms should expect increasing scrutiny of their transition efforts as the end of 2021 approaches
As part of its 2020 work program, FSB announced that it will conduct a survey of exposures to LIBOR and supervisory measures being taken to address benchmark transition issues, with the aim to improve collective understanding of LIBOR transition progress so far and to increase awareness of the importance of ensuring timely transition. In July 2020, FSB plans to deliver to the G20 Finance Ministers and Central Bank Governors , and publish, a report on the remaining challenges to benchmark transition.
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.