The governor of the Bank of England told G20 finance ministers that the FSB would start to examine whether the growing fintech sector presents any risk to the financial system. The FSB will determine its next steps in March. [...]
“The FSB is evaluating the potential financial stability implications of emerging financial technology innovation for the financial system as a whole, working with standard setters that are monitoring developments in their respective sectors. We are also working to understand better the potential impacts on financial stability of operational disruption to core financial institutions or infrastructure.”
The FSB’s scrutiny comes as financial companies are grappling with blockchain, the open-ledger technology that underpins bitcoin, the cryptocurrency. In turn, that has attracted the attention of regulators around the world. But this is the first time an international group has flagged its interest. [...]
Its attention this year is moving beyond banks: Mr Carney reiterated comments that broadly speaking banks were moving to what the FSB considers is the safe amount of capital to conserve, and that the FSB would concentrate on making sure existing regulations were implemented consistently around the world.
In a move that will cheer banks, he added that the body would examine any unintended consequences of post-crisis regulation; something that the BoE and EU are also doing.
The FSB will continue looking at asset managers, the shadow-banking sector, clearing houses and insurers.
While asset managers managed last year to convince the FSB to shelve a plan to label them as systemically important as some banks are — which would have brought extra capital charges and increased supervision — Mr Carney’s letter said the FSB would put out policy recommendations for the sector, particularly around reducing fire-sale risks. The body has been concerned with open-ended funds offering their investors redemptions at very short notice.
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