FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: February 2023

This letter was submitted to G20 Finance Ministers and Central Bank Governors (FMCBG) ahead of the G20’s meeting on 24-25 February.

The financial stability outlook remains challenging. While expectations of a ‘soft landing’ for the global economy have grown, the outlook remains clouded by uncertainty. The combination of near record-high levels of debt, rising debt service costs and stretched asset valuations in some key markets can pose serious threats to financial stability. The letter lays out the FSB’s work during 2023 to monitor and address these conjunctural vulnerabilities, as well as a number of structural vulnerabilities.

The letter introduces the reports the FSB is delivering to the February G20 FMCBG meeting, which cover:

• The financial stability aspects of commodity markets, which forms part of the FSB’s work programme to strengthen the resilience of the NBFI sector.

• The financial stability risks of decentralised finance (DeFi), a fast-growing segment of the crypto-asset ecosystem. The report forms part of the FSB’s work programme, jointly with sectoral standard setters, for the delivery of a consistent and comprehensive regulatory framework for crypto-assets.

• Priority actions for achieving the G20 targets for enhancing cross-border payments. The report contains a detailed set of next steps to achieve the G20 cross-border payments roadmap’s goals and is being accompanied by the establishment of two new taskforces to work in partnership with the private sector.

The letter also outlines forthcoming work to enhance cyber and operational resilience; and to address climate-related financial risks, through the FSB’s climate roadmap.