FSB notes significant progress in strengthening the regulation and supervision of investment funds in Brazil

28 November 2024

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Ref: 32/2024

  • Peer review finds Brazilian authorities have taken significant steps to strengthen the regulation and supervision of investment funds.
  • Review recommends further work to improve authorities’ ability to monitor vulnerabilities associated with investment funds’ activities.

The Financial Stability Board (FSB) today published its Peer Review of Brazil. The review follows up on the findings and recommendations from Brazil’s first FSB peer review in 2017 and examines subsequent developments in: authorities’ approach to monitoring vulnerabilities in investment funds; regulatory and supervisory measures to manage identified vulnerabilities and the linkages with banks; and institutional arrangements for supervising investment funds in Brazil.

The review finds that Brazilian authorities have taken significant steps to modernise and strengthen the regulation and supervision of investment funds. Measures have been introduced to limit leverage and expand the availability of tools for the management of liquidity.

The review notes further steps can be taken to continue to improve authorities’ ability to monitor vulnerabilities associated with investment funds’ activities. This includes continuing to enhance the system-wide monitoring of financial stability risks and market developments that may affect leverage and liquidity mismatch and updating the regulatory framework as appropriate.   

Ryozo Himino, Chair of the FSB’s Standing Committee on Standards Implementation (SCSI) that oversaw the preparation of the peer review said: “The introduction of the new regulation for the investment funds sector is timely given the growth and importance of the sector to Brazil. The Brazilian authorities have made significant progress since the last FSB peer review to strengthen the regulation concerning leverage and liquidity risks. This report provides a reference point to other jurisdictions with similar challenges.”  

Notes to editors

FSB member jurisdictions have committed to undergo periodic peer reviews to evaluate their adherence to international financial standards. To fulfil this responsibility, the FSB has established a regular programme of country and thematic peer reviews of its member jurisdictions. As part of this commitment, Brazil volunteered to undergo a peer review in 2023-2024.

The peer review report was prepared by a team of experts from FSB member institutions and chaired by María José Gómez Yubero from Spain’s Comisión Nacional del Mercado de Valores. The analysis and conclusions of this peer review are based on the responses to a questionnaire by financial authorities in Brazil and reflect information on the progress of relevant reforms as of July 2024. The review has also benefited from dialogue with the Brazilian authorities as well as discussion in the FSB’s Standing Committee on Standards Implementation.

A schedule of country peer reviews, as well as all completed peer review reports, are available on the FSB website.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It 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. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups. The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

Peer Review of Brazil

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Brazil’s investment funds sector is a significant part of the country’s financial system. Brazilian authorities have taken important steps to modernise the sector and to improve its regulation and supervision.

This 2024 FSB Peer Review of Brazil looks at the country’s regulation and supervision of investment funds, including by following up on the findings and recommendations from Brazil’s first FSB peer review in 2017. The latest review looks at authorities’ approach to monitoring and addressing vulnerabilities and at institutional arrangements for supervising investment funds in Brazil.

The review finds that Brazilian authorities have taken significant steps to strengthen the regulation and supervision of investment funds and have largely addressed the recommendations from the 2017 peer review.

Notwithstanding this progress, there is room for further work to improve authorities’ ability to monitor vulnerabilities associated to investment funds’ activities.

Working for Financial Stability in an Interconnected World

26 November 2024

Speech by Martin Moloney, Deputy Secretary General of the Financial Stability Board, at the High Level Regional Symposium on Financial Stability in Rabat

The views expressed in these remarks are those of the speaker and do not necessarily reflect those of the FSB or its members.

Governor, many thanks for your invitation to this important symposium. I look forward to our discussions on the vital topics that are on our agenda today.

The way you have structured the agenda and your initiative in inviting speakers such as myself from global standard setting bodies indicates strongly your understanding of the inter-connectedness between us all. Financial stability is a pre-condition of all our hopes and plans to improve the prosperity of our populations and build for the future. The risks to the stability of the financial system are complex. The degree of uncertainty we all face in trying to assess those risks is high. Understanding that those risks are closely related to the inter-connectedness between us is crucial.

In a sense all our work on financial stability is about adopting a prudent common sense in how we make use of the financial system. In a simpler world, we might have done that separately, each jurisdiction taking care of their own financial system and each jurisdiction either reaping the long term benefits of its prudence or paying the price for imprudence. That is not an option for any of us any more. We all have to recognize that what happens in, for example, US financial markets can impact the prosperity of people in Asian economies. What happens in Africa can impact on the prosperity of people in Europe and vice versa. 

We have long since opened the path for trade, commerce and finance to be conducted on an increasingly global basis. Supply lines and financing packages link us to each other across the globe. The losses faced by one can very quickly become the losses faced by all.

As recently as last August we saw a significant shock to the financial markets in Japan, but what was telling was that it impacted across the globe. Thankfully it did not last. The system stabilised. People adjusted their portfolios and as prices adjusted market participants had the liquid assets needed to meet the margin calls that the price movements triggered. This is the good news. But it reminded us, if we needed reminding, of our interconnectedness. A farmer in rural Morocco and a trader on Wall Street are connected by the invisible stands of the global economy.

It is tempting some times to think that that is not the case. Just as it is tempting sometimes to wish it were not the case. But we should recall firmly both the opportunities that arise from our interconnectedness and the risks that are unavoidably associated with having such a complex inter-connected global system.

Our organisation has been established to monitor the vulnerabilities that are inherent in the financial system and to call out bravely when we see that action must be taken. Our role is also to coordinate the development of polices by our members to manage those vulnerabilities without the opportunities inherent in the financial system being lost. We require your cooperation and support to make that work.

I am just back from the G20 meeting in Brazil. In Azerbaijan, COP 29 discussions closed over the weekend. All around we see intensive efforts to manage our complex global economy so that it creates benefits for people in their daily lives. There was a palpable sense of purpose in Brazil to fight hunger and poverty just as, at every COP, there is a deeply honest engagement by so many with the planetary climate issues we all face. But in neither place can you get away from the immensity of the tasks we face in trying to be our best selves and to coordinate globally.

I don’t want to avoid acknowledging, either, that the task we all face in trying to keep the financial system stable is immensely difficult. At the FSB we have issued 28 substantial reports over the last 12 months on a whole range of issues that must be tackled for the financial system to remain stable.  Frankly, this is not exceptional. Every year we must work constantly on emerging issues like climate and technological innovation, we must revisit exiting regulatory frameworks to improve them in light of events and we must monitor what jurisdictions are doing to encourage responsible behaviour.

And it is not only us. Each of the global standard setting bodies, the Basel Committee, the IAIS represented here, IOSCO represented here and the CPMI have to work without pause to support the stability of the financial system.

And in everything we do, we have to keep in mind the concerns of all our members, not least the distinct issues facing emerging economies. I hope and I am sure that in the panel discussion we are about to have we will have an opportunity to highlight those distinctive issues facing emerging economies.

You might be a little sceptical as to whether I mean that. You might suspect that I would think that if I can keep the major global markets and global banks stable the system will be stable. But that is not the case. I have just emphasised the importance of our inter-connectedness. But that connectedness works both ways. We all need emerging economies to be able to grow and develop in a stable way because the shocks that can destabilise the global economy can start anywhere. The risks that can turn into amplifying chains of events that cause us all to lose out through a crisis can build up anywhere. When emerging economies face what has been called a silent debt crisis, the world economy faces a threat. When emerging economies are prosperous and well managed, the whole global economy is better set on course towards prosperity.

After this event, I will make my way to the plenary meeting of the FSB where we will review the overall vulnerabilities in the system and set our work for next year. Bound into all those discussions, is our continuing focus on emerging economies.

One of the areas that the FSB works on that directly relates to emerging economies is our work to develop the cross border payments services around the world that no one relies on more than those who send remittances back home. We have been working on this challenging area for some years. We have made very good progress on a whole range of policy issues that might get in the way of efficient, transparent, low cost payment services for all. Despite the success of our work in getting rid of those obstacles we continue to see those seeking to make payments across borders having to live with services that are too slow, that are too expensive and that are not sufficiently transparent.

This work is proving difficult. Perhaps that is not surprising. Perhaps no one should ever have expected that the system would just quickly improve. Like so much else in the global financial system, payments services are complex when they start to operate across borders. There are a whole range of complexities that influence the quality of service users get. Sanctions screening, money laundering controls, capital controls, differences in technical standards limitations on competition.

The situation here in Africa is particularly concerning. 

Fundamentally, we can do better. The fast payments systems that have been introduced in many countries show that we can do better. But getting those systems to work together across borders is difficult.

We have published results this year that show limited improvement in the user experiences. But we are determined that we will go on with the work. We will do what is necessary to make the payments system work better.

As we have carried through the work we have promised to do, we have inevitably uncovered additional complications. We are engaging with data regulators. We are engaging with the private sector intensively. The OECD, the World Bank and the IMF are joining us in this work, as is FATF. And of course, the CPMI is our close partner in this work.

It should be no surprise that this has proven difficult. It should, I hope, come as no surprise that we are determined to continue this work. We have a lot of experience in bringing in complex reforms sometimes in the face of sceptical voices.

Sustainable, fair, low cost, transparent payment services across the globe serves us all. It shines a light on the benefits of our interconnectedness and helps those benefits to be shared with those who have stayed behind.

I give this as one example of the sense of conscious awareness of our social obligations with which the FSB and its members do their work. I look forward today to our discussions on financial stability. I again thank the organisers of this conference who help us to do our job with initiatives such as this.

Thank you.

2024 List of Global Systemically Important Banks (G-SIBs)

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List of G-SIBs remains at 29, with one bank moving into a higher bucket and another moving into a lower bucket.

  1. The Financial Stability Board (FSB), in consultation with Basel Committee on Banking Supervision (BCBS) and national authorities, has identified the 2024 list of global systemically important banks (G-SIBs).1 The list uses end-2023 data,2 and is based on a methodology agreed upon in July 2018 and implemented for the first time in the end-2021 G-SIB assessment.3
  2. The list for 2024 includes [29] G-SIBs, the same institutions as in the 2023 list but with different allocation of the institutions to buckets (see Annex). The changes in the allocation of the institutions to buckets (see below for details) largely reflect the effects of changes in underlying activity of banks, with the complexity category being the largest contributor to score movements. The higher loss absorbency requirement established with this list will be effective beginning 1 January 2026 if there is a bucket increase.4
  3. FSB member authorities apply the following requirements to G-SIBs:
  • Higher capital buffer: Since the November 2012 update, the G-SIBs have been allocated to buckets corresponding to higher capital buffers that they are required to hold by national authorities in accordance with international standards.5 The capital buffer requirements for the G-SIBs identified in the annual update each November will apply to them as from January fourteen months later.6 The assignment of G-SIBs to the buckets, in the list published today, therefore determines the higher capital buffer requirements that will apply to each G-SIB from 1 January 2026.
  • Total Loss-Absorbing Capacity (TLAC): G-SIBs are required to meet the TLAC standard, alongside the regulatory capital requirements set out in the Basel III framework. The TLAC standard began being phased-in from 1 January 2019.7
  • Resolvability: These requirements include group-wide resolution planning and regular resolvability assessments. The resolvability of each G-SIB is reviewed in the FSB Resolvability Assessment Process (RAP) by senior regulators within the firms’ Crisis Management Groups.8
  • Higher supervisory expectations: These requirements include supervisory expectations for risk management functions, risk data aggregation capabilities, risk governance and internal controls.9
  1. The BCBS publishes the annually updated denominators used to calculate banks’ scores and the thresholds used to allocate the banks to buckets and provides the links to the public disclosures of the full sample of banks assessed, as determined by the sample criteria set out in the BCBS G-SIB framework. The BCBS also publishes the thirteen high-level indicators of the banks in the assessment sample used in the G-SIB scoring exercise for 2024.10
  2. A new list of G-SIBs will next be published in November 2025.
g-sibs-2010-2024
  1. In November 2011 the FSB published an integrated set of policy measures to address the systemic and moral hazard risks associated with systemically important financial institutions (SIFIs). In that publication, the FSB identified as global systemically important financial institutions (G-SIFIs) an initial group of G-SIBs, using a methodology developed by the BCBS. The November 2011 report noted that the group of G-SIBs would be updated annually based on new data and published by the FSB each November. ↩︎
  2. The majority of banks reported data as of 31 December 2023. Exceptions include four banks from Australia (of which three reported data as of 30 September 2023 and one as of 31 March 2024) and all banks from Canada (31 October 2023), India (31 March 2024) and Japan (31 March 2024). ↩︎
  3. See BCBS (2018), Global systemically important banks: revised assessment methodology and the higher loss absorbency requirement, July. The G-SIB assessment methodology is set out in chapter SCO40 of the Basel Framework. ↩︎
  4. In case of a bucket decrease, the lower level of loss absorbency required will be effective immediately, unless national authorities exert discretion to delay the release of the higher loss absorbency requirement (see RBC40.6 of the Basel Framework). ↩︎
  5. In some jurisdictions, G-SIBs may be required to set aside additional capital buffers under the relevant higher loss absorbency requirements for domestic systemically important banks (D-SIBs). ↩︎
  6. G-SIB buffers are part of the buffers in the Basel III capital framework, complementing the Basel III minimum capital requirements. The Basel III monitoring results published by the BCBS provide evidence on the aggregate capital ratios under the Basel III frameworks, as well as the additional loss absorbency requirements for G-SIBs. ↩︎
  7. See FSB (2015), Total Loss-Absorbing Capacity (TLAC) Principles and Term Sheet, November. The BCBS published the final standard on the regulatory capital treatment of banks’ investments in instruments that comprise TLAC for G-SIBs on 12 October 2016. In March 2017 (updated in December 2018), the BCBS published a consolidated and enhanced framework of Pillar 3 disclosure requirements, including new disclosure requirements in respect of TLAC. ↩︎
  8. The timeline for implementation of resolution planning requirements for newly designated G-SIBs were also set out in the FSB 2013 Update of group of global systemically important banks (G-SIBs), Annex II. ↩︎
  9. The timeline for G-SIBs to meet this requirement were also set out in the FSB 2013 Update, ibid. ↩︎
  10. See BCBS,Global systemically important banks: Assessment methodology and the additional loss absorbency requirement ↩︎

FSB publishes 2024 G-SIB list

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Ref: 31/2023

  • The Financial Stability Board publishes annual list of global systemically important banks (G-SIBs).
  • No banks have been removed or added to the list, with the total number of G‑SIBs remaining at 29.
  • Compared with the list of G-SIBs published in 2023, two banks have moved between categories (i.e. buckets): Groupe Crédit Agricole has moved to a higher bucket, corresponding to a higher capital requirement, while Bank of America has moved to a lower bucket, corresponding to a lower capital requirement.

The Financial Stability Board (FSB) today published the 2024 list of global systemically important banks (G-SIBs) using end-2023 data and applying the assessment methodology designed by the Basel Committee on Banking Supervision (BCBS).

The number of banks identified as G-SIBs remains at 29; there were no additions or removals from the list. However, compared with the list of G-SIBs published in 2023, Groupe Crédit Agricole has moved from bucket 1 to bucket 2 (corresponding to a higher capital requirement), while Bank of America has moved from bucket 3 to bucket 2 (corresponding to a lower capital requirement). 

FSB member authorities apply the following requirements to G-SIBs:

  • Higher capital buffer: The G-SIBs are allocated to buckets corresponding to higher capital buffers that they are required to hold by national authorities in accordance with international standards. The capital buffer requirements established by the 2024 list will be effective beginning 1 January 2026.   
  • Total Loss-Absorbing Capacity (TLAC): G-SIBs are required to meet the TLAC standard, alongside the regulatory capital requirements set out in the Basel III framework.
  • Resolvability: These requirements include group-wide resolution planning and regular resolvability assessments. The resolvability of each G-SIB is reviewed in the FSB Resolvability Assessment Process (RAP) by senior regulators within the firms’ Crisis Management Groups. 
  • Higher supervisory expectations: These include supervisory expectations for risk management functions, risk data aggregation capabilities, risk governance and internal controls. 

The BCBS today published material related to the identification of G-SIBs, including updated denominators used to calculate banks’ scores; the thresholds used to allocate the banks to buckets; and the values of the thirteen high-level indicators of all banks in the assessment sample used in the G-SIB scoring exercise. The BCBS also provides the links to the public disclosures of all banks in the full sample of banks assessed. The BCBS interactive G-SIB dashboard has also been updated to reflect the latest results.

A new list of G-SIBs will next be published in November 2025.

Notes to editors

The requirements for G-SIBs summarised above are “higher” in the sense that they are additional to the minimum standards that apply to all internationally active banks under the Basel Framework. G-SIBs are allocated into buckets based on their systemic importance. The higher the bucket, the greater the additional capital requirement. The bucket approach is defined in paragraphs SCO40.20 to SCO40.22 of the Basel Framework.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It 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. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

Legal and regulatory challenges to the use of compensation tools

20 November 2024 | PDF full text (797 KB)

The lessons from the 2023 banking failures reinforced the lessons from the global financial crisis: compensation must be aligned with prudent risk-taking.

Compensation and related performance management mechanisms help signal the importance that financial institutions place on prudent management of risk and on standards of behaviour, including compliance with related laws, regulations and supervisory expectations. 

Compensation tools, along with other measures, can play an important role in promoting prudent risk taking and addressing misconduct risk by providing both ex ante incentives for good conduct and ex post adjustment mechanisms that ensure appropriate accountability. In 2018, the FSB published supplementary guidance on the use of compensation tools to address misconduct. The guidance provided firms and supervisors with a framework to consider how compensation practices and tools could be used to reduce misconduct risk and address misconduct incidents.

This report looks at the progress made by FSB member jurisdictions in implementing compensation tools. Consistent with findings from previous FSB compensation progress reports, there is complexity and variability in implementing different compensation tools.

Since March 2021 several jurisdictions have implemented legal and regulatory changes related to the use of compensation tools. Legal and regulatory challenges persist in the use of compensation tools, particularly clawback.

The report highlights a number of practical solutions to addressing challenges experienced by jurisdictions and firms applying these tools.

FSB Chair calls on G20 Leaders to implement agreed reforms fully

18 November 2024

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Ref: 30/2024

  • FSB Chair’s letter is accompanied by the FSB’s Annual Report, which highlights that progress in implementing key G20 regulatory reforms is uneven and that challenges remain. The FSB Chair urges the continued, full, consistent, and timely implementation of agreed-upon financial regulatory reforms.
  • Chair’s letter also details policy efforts aimed at mitigating risks associated with non-bank financial intermediation, digitalisation, and climate change.
  • In this context, the FSB has submitted reports on artificial intelligence and on achieving consistent and comparable climate-related financial disclosures.

The Financial Stability Board (FSB) today published a letter from its Chair, Klaas Knot, to G20 Leaders ahead of their Summit in Rio de Janeiro on 18-19 November. The letter is accompanied by the FSB’s Annual Report, which describes the FSB’s work to promote global financial stability.

The letter warns of ongoing vulnerabilities within the global financial system, illustrated by recent episodes of market turmoil and the failure of several banks and non-banks in recent years. The March 2023 banking turmoil underscored the ongoing risk of bank runs and the need for quicker responses to deposit outflows. Enhancing the resilience of the non-bank financial sector remains a priority, with the FSB set to release policy recommendations addressing financial stability risks stemming from leverage in the coming year.

The letter stresses the importance of effective implementation of the FSB’s policies, emphasising that authorities must not only put policies into national laws and regulations, but also build the capacity to operationalise them. This message is reiterated in the FSB’s 2024 Annual Report, which accompanies the Chair’s letter. The Annual Report, which tracks the FSB member jurisdictions’ implementation of regulatory reforms, notes uneven progress in key G20 regulatory reforms, including the final Basel III reforms and non-bank financial intermediation (NBFI) reforms.

The letter notes the potential of digitalisation to bring greater efficiencies, including in new payment infrastructures and arrangements, which have the promise of enhancing efficiency and user experience. The FSB is developing policies to ensure consistent regulation across the various forms of payments and payment providers, whether by banks or non-banks, particularly in crypto-asset and cross-border payment arrangements. The FSB has also examined the financial stability implications from the use of artificial intelligence (AI) in the financial system. While the letter notes that existing policy frameworks address many AI-related vulnerabilities, as outlined in its report, the FSB will work with national authorities and other international bodies to monitor AI use in the financial system and assess whether existing frameworks are sufficient.

Additionally, with global exposure to climate-related financial risks becoming more evident, there is an increasing need for high-quality, consistent, and comparable firm-level disclosures. To this end, the FSB is supporting global efforts for jurisdictions to adopt, apply, or otherwise be informed by the disclosure standards issued by the International Sustainability Standards Board (ISSB). The FSB’s progress report on achieving consistent and comparable climate-related disclosures notes that around three-fourths of the FSB member jurisdictions have already made significant progress towards the adoption or other use of the ISSB Standards,  but also documents some of the remaining challenges that need to be overcome.

Notes to editors

Since 2015, the FSB has published annual reports on the implementation and effects of G20 financial regulatory reforms. These reports highlight progress made by FSB members in addressing the issues that led to the 2008 global financial crisis and in building a more resilient financial system. In 2021, the report was revamped to be more forward-looking, reflecting the FSB’s shift towards new topics and emerging risks. The current report provides a high-level assessment of current vulnerabilities in the global financial system, summarises the FSB’s ongoing financial stability work, and reviews progress on G20 reforms, including evaluations or other assessments of their effects.

In July 2024, the FSB issued a consultation report that set out recommendations that aim to strengthen consistency in the regulation and supervision of banks and non-banks in their provision of cross-border payment services in a way that is proportionate to the risks associated with such activities. This approach reduces the prospect of regulatory arbitrage by establishing a level playing field, to the extent possible given differences in business models and risk profiles, for both banks and non-bank payment service providers. The final recommendations will be issued in December 2024.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It 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. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

FSB Chair’s letter to G20 Leaders: November 2024

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The global financial system continues to evolve in response to several secular trends, including digitalisation and climate change. The FSB is coordinating work to address the financial stability implications of both these trends.

This letter from the FSB Chair, Klaas Knot, was submitted to G20 Leaders ahead of their meeting in Rio on 18 September.

Episodes of market turmoil and the failure of several banks and non-banks in recent years are a stark reminder that vulnerabilities remain within the global financial system. And as the financial system evolves, new risks are emerging. It is imperative for policy makers to keep up.

Over the past year, the FSB has made meaningful progress on reforms to address key financial system vulnerabilities. The letter outlines work on the work programme to enhance resilience in non-bank financial intermediation, as well as to address risks stemming from digitalisation and climate change.

The letter is accompanied by the FSB’s Annual Report on its work to promote global financial stability.

Promoting Global Financial Stability: 2024 FSB Annual Report

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The FSB is working to address current and emerging vulnerabilities.

The FSB is carrying out policy work to foster global financial stability in response to new and emerging risks, and to enhance the functioning of G20 reforms introduced since the 2008 global financial crisis.

Key priorities include addressing lessons from the March 2023 banking turmoil; enhancing the resilience of NBFI; addressing financial risks from climate change; improving cross-border payments; responding to technological innovation; and enhancing the resolvability of central counterparties.

This annual report provides an overview of the FSB’s work in these areas. It also looks at progress in implementing G20 reforms and outlines work to be undertaken in 2025.

FSB Europe Group discusses private credit, financial and operational vulnerabilities and securitisation

15 November 2024

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Ref: 29/2024

The Financial Stability Board (FSB) Regional Consultative Group for Europe (RCG Europe) met on 14 and 15 November in Munich, Germany. The meeting was hosted by the Deutsche Bundesbank and Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).

On the first day, members participated in a workshop on the financial stability implications of private credit. Members discussed the drivers of growth of this form of credit and the benefits it brings to the broader economy. They also discussed the need to enhance understanding of potential risks, given limited data on the market, as well as existing regulations. A concentration of these schemes in the riskiest segments of the market exposes them to credit risk. Due to data gaps, lack of a secondary market to publicise valuations, and limited disclosure, it remains a challenge to monitor and understand the vulnerabilities of this sector.

Members discussed global and regional vulnerabilities in the financial system. They noted that long-standing vulnerabilities remain, including debt levels in governments, corporates and households. The spike in equity market volatility in August also signalled vulnerabilities in non-bank financial intermediation, an issue that the FSB has been discussing for a while. Geopolitical risk is likely to remain elevated, which warrants preparedness for heightened uncertainty and volatility, including in financial markets.

Another source of concern is operational vulnerabilities. Participants shared insights on how the global IT outage in July affected financial institutions in their region. On this note, they welcomed the FSB’s public consultation on a Format for Incident Reporting Exchange (FIRE) and its potential to address challenges arising from the need for financial institutions to report the same operational incident to multiple authorities.

The group took note of the findings of a recent FSB report highlighting the vulnerabilities related to a combination of solvency and liquidity risks in a high-interest-rate environment, and the role of technology and social media for depositor behaviour. Members discussed the implications of these factors and potential tools to address related challenges.

Finally, members discussed the FSB’s evaluation of the effects of the G20 financial regulatory reforms on securitisation. The FSB published a consultative report assessing the extent to which the reforms have achieved their objectives and the evolution of securitisation markets. Members discussed the effects of reforms in the European context and look forward to the FSB’s forthcoming final report.

Notes to editors

The FSB Regional Consultative Group for Europe is co-chaired by Soledad Núñez, Deputy Governor, Bank of Spain, and Vasileios Madouros, Deputy Governor, Central Bank of Ireland. Membership includes financial authorities from Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland, Ukraine, United Kingdom and the Group of International Finance Centre Supervisors. The European Commission, the European Central Bank (ECB), the ECB Banking Supervision also attended the meeting.

The FSB has six Regional Consultative Groups, established under the FSB Charter, to bring together financial authorities from FSB member and non-member countries to exchange views on vulnerabilities affecting financial systems and on initiatives to promote financial stability.1 Typically, each Regional Consultative Group meets twice each year.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It 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. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

  1. The FSB Regional Consultative Groups cover the following regions: Americas, Asia, Commonwealth of Independent States, Europe, Middle East and North Africa, and sub-Saharan Africa. ↩︎