On Saturday, the Financial Stability Board (FSB) held its third Plenary Meeting in Basel, Switzerland to discuss financial reform in 2010 and to reaffirm the timelines for related policy development and implementation. The FSB noted that, while signs of global economic recovery have "strengthened," further work "is essential to address the underlying weaknesses that caused the crisis." In the view of the FSB, the recovery is "increasingly differentiated among markets and institutions," indicating that continued policy response and support may "need to be more targeted to addressing specific areas of weakness," including "small and medium-sized enterprises." FSB members "reaffirmed their commitment to raising the quality and level of capital and liquidity buffers in the banking system," and by next October, "agreed to develop a package of measures to address the 'too big to fail' problems associated with systemically important financial institutions." The FSB also "welcomed" the recent Joint Forum report, which makes recommendations to address current gaps in supervision and regulation, and "continues to monitor progress" in implementing G-20 and FSB recommendations for improved, converged accounting standards.
Also on Saturday, the FSB published a framework entitled FSB Framework for Strengthening Adherence to International Standards in an effort to "encourag[e] all countries and jurisdictions to raise their level of adherence to international financial standards." Under this framework:
- FSB member jurisdictions will "lead by example, including by implementing international financial standards and disclosing their level of adherence";
- FSB member jurisdictions will undergo periodic thematic and single-country peer reviews to evaluate their adherence to international standards; and
- The FSB will "establish a toolbox of measures to encourage adherence to international cooperation and information exchange standards by all countries and jurisdictions," as called for by G-20 leaders at the April 2009 London Summit.
Finally, the FSB announced the launch of a peer review of implementation of the FSB Principles for Sound Compensation Practices and their Implementation Standards, with a March 2010 target completion date. FSB stated that the review "will focus on the steps being taken or planned by FSB member jurisdictions to ensure effective application of the Principles and Standards, as well as progress to date in implementation by significant financial institutions."