The “pivot” by the Financial Stability Board comes a decade after it grew in prominence as politicians around the world tried to firefight bank failures. Today, countries, particularly the US, are rolling back some of the reforms made in the wake of the financial crisis and instead focusing on job creation.
The explicit pause in rulemaking by the FSB, which makes recommendations to the G20 countries, also comes as threats emerge, including the rapid growth in digital currencies such as bitcoin.
But in a letter to G20 finance ministers and central bankers ahead of a summit in Argentina, Mark Carney, the chair of the FSB and the governor of the Bank of England, said that the group judged that “crypto-assets do not pose risks to global financial stability at this time” because “they are small relative to the financial system”.
Mr Carney said earlier this month that crypto-assets and their ecosystems, particularly exchanges, should come into “the regulatory tent”. The FSB said it would keep crypto-assets under close review, however, because if they are taken up more widely, they could pose more risks.
“As its work to fix the faultlines that caused the financial crisis draws to a close, the FSB is increasingly pivoting away from design of new policy initiatives towards dynamic implementation and rigorous evaluation of the effects of the agreed G20 reforms,” Mr Carney wrote.
“The objective is to assess whether reforms are operating as intended, and to identify and deliver adjustments where appropriate, without compromising on either the original objectives of the reforms or the agreed level of resilience.”
The FSB, together with the Basel Committee on Banking Supervision — which finally agreed an important reform package late last year — has implemented rules to try to prevent “too big to fail” banks needing bailouts, such as those they received during the crisis. Those rules include doubling the amount of capital banks have to hold; getting them to write “living wills”; and developing special debt that converts to equity should a bank collapse, forcing creditors and shareholders to be on the hook rather than taxpayers.
Full article on Financial Times (subscription required)
Financial Stability Board Chair’s letter to G-20 Finance Ministers and Central Bank Governors
© Financial Times
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article