FSB Report Notes Implementation of Final Basel Reforms at Early Stage
The Financial Stability Board (FSB) published its annual report presenting the work done to promote global financial stability. The report notes that the outlook for financial stability continues to be dominated by the COVID-19 pandemic, with the recovery uneven across economies and sectors. The report highlights the analytical and policy work the FSB is doing to foster global financial stability in response to the pandemic as well as to new and emerging risks. This includes, among others, work on the resilience of non-bank financial intermediation (NBFI), cyber incident response and recovery, “global stablecoin” arrangements (to enhance cross-border payments), and climate-related financial risks.
The report finds that there has been limited additional progress in implementing G20 reforms over the past year, as authorities have focused on responding to the impacts of the pandemic. Regulatory adoption of core Basel III elements has generally been timely to date, but implementation of the final reforms to the capital framework is still at a very early stage. More work is needed to close gaps in the operationalization of resolution plans of banks and to implement effective resolution regimes for insurers and central counterparties. The report notes that the COVID experience provides important lessons for functioning of the G20 reforms and reinforces the importance of global regulatory cooperation and of completing the remaining elements of the post-crisis reform agenda. The financial stability benefits of the full, timely, and consistent implementation of G20 reforms remain as relevant as when they were initially agreed. It will be important to evaluate the functioning of implemented reforms during COVID-19 and evaluate whether they are effectively working as intended. FSB and the standard-setting bodies will continue to promote approaches to deepen international cooperation, coordination, and information-sharing, with the support of the G20.
The report also highlights that authorities continue to closely monitor developments to ensure that the pandemic does not test resilience of the global financial system. One of the legacies of the pandemic is the build-up of debt in the non-financial sector. Addressing debt overhang, including by assessing the viability of companies, facilitating the market exit of unviable companies, and promoting an efficient reallocation of resources to viable firms, may be a key task for policymakers going forward. FSB is working on possible approaches to dealing with debt overhang issues from a financial stability perspective and will publish, in early 2022, a thematic peer review on experience with out-of-court corporate debt workouts.
Related Links
Keywords: International, Banking, Securities, Basel, COVID-19, NBFI, Climate Change Risk, Stablecoins, Cross-Border Payments, Cyber Risk, Final Basel III Reforms, FSB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
Bundesbank Publishes Circulars on AnaCredit Reporting RequirementsNext Article
ACPR Publishes Corrective Version of RUBA TaxonomyRelated Articles
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance
The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks
EC Publishes Results on Review of Web Accessibility Directive
The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.
NGFS Report Explores Quantification of Climate Risk Differentials
The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations
MAS Consults on Adjustment Spreads for Conversion of SOR Contracts
The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
