In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021. In accordance with the FSB work program for 2021, the key priorities for the year involve addressing COVID-19 related vulnerabilities, enhancing resilience of non-bank financial intermediation, improving understanding of climate risks, enhancing cross-border payments (includes approach to regulation of stablecoins), and addressing other financial stability topics of ongoing importance. Other important financial stability topics include transition away from LIBOR, policy framework for central counterparties, and addressing cyber-security issues.
The key expected outcomes in terms of the prioritized work in 2021 are as follows:
- FSB plans to explore initial lessons learned from the COVID-19 event and report, in April 2021, on factors needed for an orderly unwinding of support measures, as part of its work to support international coordination on COVID-19 policy responses. In April 2021, FSB also plans to publish the final version of its evaluation of the too-big-to-fail reforms for banks.
- As part of its work in the area of nonbank financial intermediation, in July 2021, FSB plans to deliver policy proposals to enhance the resilience of money market funds, with a final report expected in October 2021. Other work will entail examining the frameworks and dynamics of margin calls in centrally cleared and uncleared markets and the liquidity management preparedness of market participants to meet margin calls.
- FSB plans to assess the availability of data through which climate-related risks to financial stability could be monitored, with aim of identifying existing data gaps. FSB also intends to coordinate with other standard-setting bodies to promote globally comparable, high-quality, and auditable standards of disclosure and to review the regulatory and supervisory approaches to addressing climate-related risks at financial institutions.
- FSB plans to issue an update on the regulatory and supervisory approaches to global stablecoins and to deliver a final set of quantitative targets for making cross-border payments cheaper, faster, more transparent, and more inclusive.
Keywords: Keywords: International, Banking, COVID-19, G20, Stablecoins, Cyber Risk, Climate Change Risk, Non-Bank Financial Intermediation, Work Priorities, Resolution Framework, Benchmark Reforms, FSB
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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