Eleven issues in total were discussed at FSB meeting in Zurich. For this post and the next one, I would like to introduce all of them to you. They have been considered the most critical and significant issues demanding attention in international financial system.
1. Establishing FSB Association
FSB Association was established under Swiss law, which is taking a step towards implementing the recommendations raised at the G20 Summit in Los Cabos, 2012. The Association represents a firmly built organizational footing of FSB, while making strong relations with the Bank for International Settlements (BSI).
2. Vulnerabilities in the Financial System
For financial innovation and structural changes in financial markets, the FSB discussed the increasing use of collateral transformation by market participants. For this ends, FSB will keep monitoring the growth and potential risks of this activity, and the role of collateral transformation in mitigating collateral scarcity
3. Over-the-counter (OTC) Derivatives Reforms
OTC derivatives market reforms, which should be achieved by the end of last year, were discussed at this meeting. The FSB members agreed to make a strong commitment to the rapid completion of the agreed reforms. For such a completion, all jurisdictions should adopt legislative and regulatory frameworks promptly.
4. Resolving Falling Financial Institutions
FSB will focus on three issues with regards to resolution in this year;
- Addressing remaining obstacles to the implementation of resolution strategies for G-SIFIs (Global Systemically Important Financial Institutions
- Launching an effective resolvability assessment process to evaluate resolvability of all G-SIFIs, and
- Developing guidance on the resolution of non-bank financial institutions
5. Risk Governance
The FSB peer review report will be soon published to monitor rick governance of financial institutions. The publication is seeking to promote more effective risk governance practices, as the FSB members welcome the recommendations suggested by the report.
Before you get tired of too many issues brought up at once, I will stop here for this post. For the other six issues, please look for the follow-up post which will be the end of FSB meeting result.