Featured Product

    Dietrich Domanski of FSB on Priorities for International Cooperation

    September 13, 2019

    While speaking at the Eurofi Forum in Helsinki, the FSB Secretary General Dietrich Domanski discussed three priorities for international regulatory and supervisory cooperation: implementation, integration, and innovation. He highlighted that FSB is pivoting from post-crisis policy design to reinforcing the resilience of the global financial system. This pivot reflects these evolving priorities for international regulatory and supervisory cooperation.

    The following are the key highlights of his remarks:

    • Implementation of post-crisis reforms. The annual report of FSB to G20 Leaders shows that implementation progress of post-crisis reforms remains uneven, both across reform areas and across jurisdictions. The remaining work includes implementing the final Basel III reforms; operationalizing resolution plans for cross-border banks, building effective resolution regimes for insurers and central counterparties, improving effectiveness of OTC derivatives trade reporting, and further strengthening the oversight and regulation of nonbank financial intermediation. He also added that an end to the period of very low interest rates and search for yield seems out of sight, which heightens the importance of effective supervision that includes a macro-prudential perspective. Thus, it is important that quick, analytically robust, assessments of risks can be shared by authorities and, where necessary, acted on. To this end, FSB is reviewing its surveillance framework to ensure that it can provide such assessments, said Mr. Domanski.
    • Integration of financial markets. A second priority is to preserve the benefits of integrated financial markets. To this end, FSB had embarked on work on market fragmentation and published a report on the topic in June. Mr. Domanski emphasized that the relationship between market fragmentation and financial regulation is complex. The challenge is to identify and address harmful fragmentation. Thus, the FSB report lays out approaches and mechanisms that may enhance the effectiveness and efficiency of international cooperation and help to mitigate any negative effects of market fragmentation on financial stability. This includes steps to consider issues around market fragmentation at different stages: as policies are developed; as they are implemented; and when they are being evaluated. G20 Leaders welcomed the FSB work on market fragmentation and committed to address the related unintended, negative effects; this is a strong signal about the importance of preserving integrated market and the important role that international cooperation plays in this regard. Work is being taken forward on deference processes in derivatives markets; prepositioning of capital and liquidity by international banks; and as part of the FSB evaluation of too-big-to-fail reforms.
    • Financial innovation. The third priority concerns financial innovation. Authorities need to find ways to harness the benefits of digital innovation while containing risks. New technologies such as distributed ledger technology could lead to a more decentralized financial system—by eliminating, or reducing the role, of intermediaries that have traditionally been involved in the provision of financial services. Decentralization may pose challenges for financial regulatory and supervisory frameworks focused on centralized financial institutions, including question around the location of financial assets or records. A more decentralized financial system may reinforce the importance of an activity-based approach to regulation, particularly where it delivers financial services that are difficult to link to specific entities and/or jurisdictions. New entrants into the financial services space, including fintech firms and large, established technology companies (bigtech), could materially alter the universe of financial services providers. This could present both benefits and risks for financial stability. A recent example are proposals to use new types of crypto-assets for retail payment purposes on a broad, potentially global scale. In the Osaka Summit Declaration, G20 Leaders have called on the FSB to assess the implications of such new developments and advise on multilateral response as appropriate.

    Mr. Domanski concluded that these priorities "reinforce the case for international cooperation—because of the intrinsically global nature of key financial markets and technological innovation and because of the potential global impact of financial instability." For the FSB, this means means working with all stakeholders to understand the challenges that lie ahead and find solutions that support sustained economic growth and financial stability.

     

    Related Link: Speech (PDF)

     

    Keywords: International, Banking, Basel III, Financial Stability, Market Fragmentation, Fintech, Regtech, Suptech, International Cooperation, FSB

    Featured Experts
    Related Articles
    News

    APRA Issues Interim Update to Policy Priorities for 2021 and Beyond

    In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.

    September 24, 2021 WebPage Regulatory News
    News

    EC Adopts Solvency II and Resolution Rules Package for Insurers

    The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.

    September 22, 2021 WebPage Regulatory News
    News

    OCC Issues Booklets on Regulatory Reporting and Earnings

    The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.

    September 22, 2021 WebPage Regulatory News
    News

    ECB Sets Out Results of Economy-Wide Climate Stress Tests

    The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.

    September 22, 2021 WebPage Regulatory News
    News

    EBA Examines Implications of Increasing Use of Digital Platforms in EU

    The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.

    September 21, 2021 WebPage Regulatory News
    News

    HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact

    The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.

    September 21, 2021 WebPage Regulatory News
    News

    ISDA Responds to BCBS Proposal on Treatment of Cryptoasset Exposures

    The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.

    September 21, 2021 WebPage Regulatory News
    News

    BIS Quarterly Review Discusses Developments in Fintech and ESG Space

    BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.

    September 20, 2021 WebPage Regulatory News
    News

    BCBS to Consult on Supervisory Practices for Climate Risks by Year-End

    The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards

    September 20, 2021 WebPage Regulatory News
    News

    OCC Identifies Operational Risk Deficiencies in MUFG Union Bank

    The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.

    September 20, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7494