This letter from the FSB Chair Randal K. Quarles to G20 Leaders ahead of their Summit in Osaka on 28-29 June 2019 sets out progress by the FSB over the past year in enhancing global financial stability and furthering the G20’s goals in a number of key themes:

  • Addressing new and emerging vulnerabilities – the FSB will remain vigilant in identifying emerging risks. Potential vulnerabilities persist and, in some cases, have built up further. Corporate and public debt levels have continued to rise. The FSB is closely monitoring leveraged loan and collateralised loan obligation markets in order to obtain a fuller picture of the pattern of exposures to these assets globally.

  • Harnessing the benefits of financial innovation while containing risks – a deep and early understanding of how technological innovation may transform financial institutions and markets is key for harnessing benefits while containing risks. One example is crypto-assets. A wider use of new types of crypto-assets for retail payment purposes would warrant close scrutiny by authorities to ensure that that they are subject to high standards of regulation. The FSB and standard-setting bodies will monitor risks very closely and in a coordinated fashion, and consider additional multilateral responses as needed.

  • Completing implementation of the agreed reforms and ensuring that the reforms work as intended – the implementation progress report published together with the letter shows that the new financial regulatory framework called for by the G20 is now largely in place. However, despite continued progress, implementation is not complete and remains uneven across reform areas. G20 Leaders’ continued support in implementing the agreed reforms is needed. Finalising post-crisis reforms and monitoring their effective implementation remains a focus of FSB work.

  • Promoting an integrated global financial system – an open and resilient financial system, grounded in agreed international standards, is crucial to support sustainable growth. The FSB’s report on market fragmentation identified several areas where further work may help to strengthen mechanisms and approaches to address market fragmentation through more efficient and effective cooperation going forward. This includes mechanisms to avoid future fragmentation.

  • Strengthening the FSB’s outreach and accountability – reaching out beyond its membership is key for the FSB to achieve its mandate of promoting global financial stability. The FSB is taking steps to improve communication and transparency, to facilitate wider input to the FSB’s work and increase understanding of what it does.