Financial Stability Board

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Financial Stability Board
Founded	April 1999
Headquarters	Basel, Switzerland
Products	Global group of regulators
Twitter	@FinStbBoard
LinkedIn	Profile
Web site	FSB Homepage
Releases	Organization News

EU regulation establishing the European Banking Authority

Volcker Rule

ESMA Regulation - White Paper - ESMA’s policy orientations on guidelines for UCITS Exchange-Traded Funds and Structured UCITS - July 2011

European Swaps Regulation - White Papers

The Financial Stability Board (FSB) is an entity established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability. It was set up in the immediate aftermath of the 2008 financial crisis to monitor and ward off threats to the global financial system.

FSB brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts.

Framework

The FSB’s structure contains a framework for the identification of systemic risk in the financial sector, for framing policy to address these risks, and for overseeing implementation of those responses. The Plenary is the board's decision-making body. The FSB also contains a steering committee and three standing committees, each with specific and complementary responsibilities:

• The Standing Committee on Assessment of Vulnerabilities (SCAV), which is the FSB’s main mechanism for identifying and assessing risks
• The Standing Committee on Supervisory and Regulatory Cooperation (SRC), which is charged with undertaking further supervisory analysis or framing a regulatory or supervisory policy response to a material vulnerability identified by SCAV.
• The Standing Committee on Standards Implementation (SCSI), which is responsible for monitoring the implementation of agreed FSB policy initiatives and international standards.

The FSB’s decisions are not legally binding on its members – instead the organization operates by moral suasion and peer pressure, in order to set internationally agreed policies and minimum standards that its members commit to implementing.

Cryptocurrency

In July 2018, FSB published a report on the global implications of cryptocurrency. The report concluded that "crypto-assets do not pose a material risk to global financial stability at this time," yet recognized "the need for vigilant monitoring in light of the speed of market developments." In the report, the organization described a framework for monitoring the crypto markets, in collaboration with the Committee on Payments and Market Infrastructures (CPMI). This framework included metrics on trading volumes, pricing, clearing and margining for crypto-asset derivatives.

In October 2018, the FSB published another report saying that cryptocurrency poses numerous threats to global financial stability, though the threat is not yet "significant" due to the limited size of the market.

Libra

Libra, the cryptocurrency project created by Facebook, became a significant issue on the FSB's radar shortly after its announcement in May 2019. The international FSB said it would be keeping a close eye on the project around the same time, even sending a letter to G20 leaders ahead of their summit in Osaka, Japan; Randal Quarles, the head of the FSB and vice-chairman of the Federal Reserve said that "wider use of new types of cryptoassets for retail payment purposes would warrant close scrutiny by authorities to ensure that they are subject to high standards of regulation."

Creation of the TCFD

In April 2015, the FSB was asked by the G20 finance ministers and central bank governors to convene public- and private-sector participants to review how the financial sector can take account of climate-related issues. In this review, the FSB identified the need for better information to improve understanding of climate-related risks and inform investment, lending, and insurance underwriting decisions. As a result, the FSB established an industry-led task force — the Task Force on Climate-related Financial Disclosures (TCFD). In June 2017, the TCFD released its final recommendations for voluntary climate-related financial disclosures useful for understanding material risks. It has provided a status report every years since, with the most recemt being released in September 2022.

History

The Financial Stability Forum originated on Oct. 3, 1998, when the finance ministers and central bank governors of the G7 countries commissioned Dr. Hans Tietmeyer, president of the Deutsche Bundesbank, to recommend a new structure to enhance co-operation among the national and international supervisory bodies and international financial institutions to promote international financial stability. Tietmeyer recommended the creation of a Financial Stability Forum.

In April 2009, an expanded FSF was re-established as the Financial Stability Board (FSB) with a broadened mandate to promote financial stability.

The FSB met March 11-12, 2009 in London. Members discussed risks and vulnerabilities in the financial markets and what could be done to address them.

In mid March of 2009, it was reported that three major hedge fund industry bodies had written to the FSB to commit to working towards global industry standards for the first time ever. The Alternative Investment Management Association (AIMA), the President's Working Group (PWG) and the Managed Funds Association (MFA) told the FSB that they would achieve convergence in areas such as regulatory supervision and reporting risk positions, according to a source. The letter came as the FSB put forward recommendations to Group of 20 finance ministers who proposed that hedge funds or their managers should be registered and disclose information needed to assess systemic risks they pose.

The FSB met in Paris on Sept. 15, 2009. This was the second plenary meeting of the FSB since its establishment in April 2009.

In April of 2011, the Financial Stability Board warned European fund managers of tighter regulations regarding exchange-traded funds. The FSB is specifically concerned about 'plain vanilla' and swap-based exchange traded funds, which could lead to liquidity issues.

Member Institutions

• Reserve Bank of Australia
• Bank of Canada
• Office of the Superintendent of Financial Institutions
• Department of Finance
• Banque de France
• Autorité des Marchés Financiers
• Ministère de l'Economie
• Deutsche Bundesbank
• Bundesanstalt für Finanzdienstleistungsaufsicht
• Bundesministerium der Finanzen
• Hong Kong SAR
• Hong Kong Monetary Authority
• Banca d'Italia
• Commissione Nazionale per le Società e la Borsa
• Ministero dell'Economia e delle Finanze
• Bank of Japan
• Financial Services Agency
• Ministry of Finance
• De Nederlandsche Bank
• Monetary Authority of Singapore
• Swiss National Bank
• Bank of England
• Financial Services Authority
• HM Treasury
• Board of Governors of the Federal Reserve System
• U.S. Securities and Exchange Commission
• U.S. Department of Treasury
• Bank for International Settlements (BIS)
• European Central Bank (ECB)
• International Monetary Fund (IMF)
• Organisation for Economic Co-operation and Development (OECD)
• World Bank
• Basel Committee on Banking Supervision (BCBS)
• Committee on the Global Financial System (CGFS)
• Committee on Payment and Settlement Systems (CPSS)
• International Association of Insurance Supervisors (IAIS)
• International Accounting Standards Board (IASB)
• International Organization of Securities Commissions (IOSCO)

Key People

• Klaas Knot, Chair

Former chairpersons have included Mark Carney, governor of the Bank of England, Mario Draghi, governor of the Banca d'Italia, Andrew Crockett, General Manager of the Bank for International Settlements, Roger W. Ferguson, Vice Chairman of the Board of Governors of the Federal Reserve System, and Randal K. Quarles.