FSB: G20 Reform Progress “Steady But Uneven”

The Financial
Stability Board’s (FSB) second annual report on the Implementation and Effects of the G20
Financial Regulatory Reforms
, concludes that implementation progress “remains steady but
uneven”.

The report says that the largest
internationally active banks are considerably more resilient than before the 2008
financial crisis, and remain
on track
to meet the Basel III capital and liquidity standards.

Importantly, the FSB claims that
this improvement has been achieved while maintaining the overall provision of
credit to the real economy.

The report
notes that although policies have been enacted to tackle the infamous “too-big-to-fail”
problem for the banks most systemically important to the global financial
system, “substantial work
remains to build effective resolution regimes and to operationalise resolution
plans for cross-border firms”.

It also highlighted that, while
progress has been made in strengthening the resilience of financial markets, “additional
efforts are needed to implement reforms to over-the-counter (OTC) derivatives
markets and to transform shadow banking into resilient market-based finance”.

The report adds: “In this
respect, work is ongoing to strengthen market infrastructure and address
vulnerabilities in market-based finance and asset management activities.”

Speaking about the annual
report, Mark Carney, the FSB Chair says: “Our second annual report highlights
the achievements to date in strengthening the resilience of the global
financial system.

“But this significant progress
must not lead to complacency. Our priorities must be to implement our past
agreements in a full, timely and consistent manner; to address new risks and
vulnerabilities; and to continue to build an open global financial system that
benefits all.”

The report highlights key
challenges that G20 Leaders need to address to ensure the full, timely and
consistent implementation of the reforms.

These include: putting in place
legal powers to share information across borders and to give prompt effect to
foreign resolution actions; removing legal barriers to reporting OTC
derivatives to trade repositories and to authorities’ access to such data; and
(iii) removing other legal, data and capacity constraints that could hamper
implementation efforts.

Earlier
this week the FSB issued another report, in which it stated that further action
is required to improve
the implementation of OTC derivatives reform
, and released
an update
that summarises FSB member jurisdictions’ planned actions to
remove legal barriers to reporting complete transaction information to trade
repositories and to authorities’ access to data held in trade repositories.

 

galen@profit-loss.com

@Galen_Stops

@Profit_and_Loss

Galen Stops

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