FSB’s progress report to the G20 Finance Ministers and Central Bank Governors highlights:
- Progress in its key reform areas of (i) building resilient financial institutions; (ii) ending “too big to fail”; (iii) strengthening oversight and regulation of shadow banking activities; (iv) creating core continuous markets by OTC derivatives and other reforms; and (v) being timely and consistent in implementing reforms.
- Its work on D-SIBs. FSB reports its discussions with Basel on a set of principles representing a minimum framework for D-SIBs. The principles cover assessing systemic importance of domestic institutions and how authorities should work to contain the risks. The discussions acknowledged the framework has to recognise jurisdictional individualities, but there will still be cross-border interest in D-SIBs so it is important to ensure national approaches do not differ widely.
- Its report on shadow banking. FSB notes the important role the shadow banking system plays to support the economy but also notes the risks it poses to the financial system. Not least, it can be used to avoid financial regulation. FSB’s report summarises its October 2011 report with recommendations and discusses the five policy areas in which it wants to strengthen regulation. These are (i) banks’ interactions with shadow banking entities; (ii) money market funds; (iii) other shadow banking entities; (iv) securitisations; and (v) securities lending and repos. The report explains what Basel and FSB plan in each area.
- Accounting standard setters’ work on converging their standards.