FSB Examines Implementation of Resolution Regimes in Financial Sector
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions and sets out plans for further work. The report also presents the status of implementation of aspects of bank resolution regimes by FSB jurisdictions, along with the planned actions and timelines going forward. The report reveals that significant progress has been achieved; however, progress is uneven across reform areas and sectors and there is need to be mindful of remaining gaps. The report concludes that authorities and firms need to be mindful of the remaining gaps as they work toward making resolution strategies and plans operational in all sectors.
This report, which has been prepared by the FSB Resolution Steering Group or ReSG, is the eighth report on the implementation of resolution reforms. It takes stock of progress made by FSB members in implementing reforms and summarizes findings from the monitoring of resolvability across the banking, insurance, and financial market infrastructure sectors. It discusses progress in implementing the resolution policies of FSB for banks, insurers, and central counterparties or CCPs. It also examines the initiatives in monitoring implementation and evaluating the effects of resolution reforms and presents actions and timelines going forward. Annex 1 to the report presents the status of implementation of aspects of bank resolution regimes by FSB jurisdictions, as of September 2019. The status is based on self-reporting by national authorities. The availability of legal frameworks and regimes in jurisdictions does not mean that resolution will necessarily be effective, nor does the absence of such powers necessarily mean that a jurisdiction will not be able to achieve an effective resolution.
With respect to the banking sector, the report highlights that global systemically important banks have been made more resolvable through the build-up of total loss-absorbing capacity, or TLAC, and other measures. Notwithstanding this progress, challenges remain. Authorities need to determine the appropriate balance between group-internal distribution of Total loss-absorbing capacity and non-pre-positioned resources. Furthermore, access to temporary liquidity in relevant currencies and in adequate amounts when and where needed is critical for firms going through resolution and requires ex ante preparation by firms and authorities.
In the insurance sector, over the past year, two jurisdictions (Netherlands and Singapore) have introduced or strengthened powers to resolve insurers. Resolvability monitoring highlighted the challenges stemming from group-internal interconnectedness. Ongoing work on resolution planning focuses on intragroup funding, intragroup reinsurance, centralized cash pooling, intragroup guarantees, and operational interconnections. Additionally, work on resolution funding encompasses temporary sources of funding and interactions with any existing policyholder protection schemes, information-sharing, and communication.
A policy priority for the FSB is the further strengthening of the resilience and resolvability of central counterparties. The continuing work on financial resources and tools to support orderly resolution will lead to further guidance, on which the FSB will publicly consult during the second quarter of 2020. FSB is developing this guidance in consultation with CPMI and IOSCO. This work draws on the experience of authorities and Crisis Management Groups in assessing the quality and quantity of resources for resolution and on the comments received from stakeholders in response to the public consultation. The future guidance should help authorities and Crisis Management Groups in adopting a structured process for evaluating the adequacy of resources to support resolution on a CCP-specific basis and, if necessary, addressing the need for any additional resources considering a reasonable range of scenarios. It should also assist authorities and Crisis Management Groups in their analysis of the treatment of central counterparty equity.
Related Links
Keywords: International, Banking, Insurance, Securities, FMI, CCPs, Resolution Regime, Resolution Framework, Crisis Management, Systemic Risk, SIFI, FSB
Featured Experts

Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
ESAs Publish Draft Amendments to Bilateral Margin RequirementsRelated Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.