FSA has published its Financial Risk Outlook (FRO) for 2009. It concentrates on:  

  • the financial and economic crisis, and sets out the elements the Turner review will cover. It concentrates on bank capital requirements, liquidity and institutional coverage (that looks at the economic effects of vehicles rather than their description);  
  • the economic outlook, looking at how the economy and financial sector could evolve over the medium and long term; and  
  • the risks and implications for the financial and economic environment for firms, market participants and consumers.  

The paper considers the potential role of colleges of supervisors and the possible need for stronger host state controls than the current EU regime allows. It looks particularly at lessons to learn from the Iceland experience, especially on restrictions of branch passport rights and specifically where retail deposits are involved. It also looks at how the market infrastructure dealt with the Lehman collapse, noting the clearing house dealt with all issues without resorting to its default fund and the CDSs settled in an orderly way. However, it highlights the problems caused by non-banks holding client money that creditors were unable to get back.