FSB Asia group discusses responses to COVID-19 and enhancing cross-border payments

3 November 2020

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Ref no: 43/2020

The Financial Stability Board (FSB) Regional Consultative Group (RCG) Asia held a virtual meeting today. Members discussed recent global and regional macroeconomic and financial market developments, including possible financial stability implications from the COVID-19 pandemic, steps to support a sound economic recovery and the need to develop exit strategies. Members considered the financial stability implications for emerging markets of broader financial market developments, including those stemming from the rising debt levels and access to dollar funding where conditions have eased thanks to coordinated action by central banks.

The RCG discussed the FSB’s deliverables to the G20 Riyadh Summit later this month and the FSB’s work programme for 2021, which will be agreed by the FSB Plenary and published later this year. The group also discussed issues they would like to see covered in the FSB’s work programme during the G20 Italian Presidency.

Last month, the FSB published a roadmap for enhancing cross-border payments which aims to make cross-border payment services, including remittances, faster, cheaper, more transparent and more inclusive. The group welcomed the roadmap and set out actions they plan to take to contribute to meeting the overall roadmap goals. They also discussed types of capacity building that may be useful to help address implementation challenges, and agreed on the need for industry engagement to help deliver the roadmap.

Notes to editors

The FSB RCG for Asia is co-chaired by Benjamin E. Diokno, Governor, Bangko Sentral ng Pilipinas and B.P. Kanungo, Deputy Governor, Reserve Bank of India. Membership of the RCG Asia comprises financial authorities from Australia, Brunei Darussalam, Cambodia, China, Hong Kong SAR, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

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 Randal K. Quarles, Vice Chairman, US Federal Reserve; its Vice Chair is Klaas Knot, President, 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. [←]

OECD Recommendation on Financial Literacy

29 October 2020

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Financial literacy has become a long-term policy priority in many countries and economies and is recognised as an important complement to market conduct, prudential regulation, and financial inclusion.

Over recent decades, the financial environment has evolved, giving greater opportunities to individuals to access finance as well as manage and plan their financial future. At the same time, the financial landscape has become more complex and digital financial services have introduced new challenges and risk factors. Demographic, socio-economic and financial developments have been further compounded by the socio-economic crisis resulting from the COVID-19 pandemic. Despite the growing complexity of the financial and risk landscape, recent financial literacy surveys conducted by the OECD have highlighted that many people – especially vulnerable groups – lack even basic financial knowledge and are ill-prepared to make savvy financial decisions. Because of these challenges, policies aimed at enhancing the knowledge of financial products and their associated risks, as well as policies strengthening consumers’ financial competences, their overall financial resilience and well-being are essential, within a robust financial consumer protection framework. 

The Recommendation was developed initially in the International Network on Financial Education (INFE). It updates and replaces four previous OECD Recommendations on financial education: the 2005 Recommendation of the Council on Principles and Good Practices for Financial Education and Awareness (OECD/LEGAL/0338), the 2008 Recommendation of the Council on Good Practices for Enhanced Risk Awareness and Education on Insurance Issues (OECD/LEGAL/0357), the 2008 Recommendation of the Council on Good Practices for Financial Education Relating to Private Pensions (OECD/LEGAL/0359), and the 2009 Recommendation of the Council on Good Practices on Financial Education and Awareness Relating to Credit (OECD/LEGAL/0370).  

It also draws on further work on financial education developed by the OECD that has been recognised in the G20 and Asia-Pacific Economic Co-operation (APEC).

The Recommendation is open to adherence by OECD Members and non-Members.  While not legally binding, practice accords it great moral force as representing the political will of OECD Members and non-Members having adhered to it (Adherents), on whom there is an expectation to do their utmost to fully implement it.

FSB welcomes TCFD status report

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Ref no: 42/2020

The Financial Stability Board (FSB) welcomed the publication today of the 2020 status report by the industry-led Task Force on Climate-related Financial Disclosures (TCFD), which reports on the further growth in TCFD-aligned disclosures by firms.

The TCFD was established by the FSB in 2015 to develop a set of voluntary, consistent disclosure recommendations for use by companies in providing information to investors, lenders and insurance underwriters about their climate-related financial risks. The industry members of the TCFD, who are drawn from a wide range of industries and countries from around the globe, finalised the recommendations in 2017 after extensive public engagement and consultation. They set out the disclosures that a wide range of users and preparers of financial filings have said are essential to understanding a company’s climate-related risks and opportunities.

Since then, more than 1,500 organisations have expressed their support for the TCFD recommendations, an increase of over 85% since the 2019 status report. Nearly 60% of the world’s 100 largest public companies support the TCFD, report in line with the TCFD recommendations, or both. The latest status report finds that disclosure of climate-related financial information aligned with the TCFD recommendations has steadily increased since the recommendations were published in 2017. However, the report highlights the continuing need for progress in improving levels of TCFD-aligned disclosures given the urgent demand for consistency and comparability in reporting.

In July the FSB’s stocktake on financial stability monitoring of climate risks concluded that work to quantify climate-related risks is hindered by a lack of consistent data on financial exposures to climate risks. Effective disclosures by firms can help to fill those data gaps.

FSB Chair Randal K. Quarles said: “The TCFD recommendations support greater consistency in climate-related risk disclosures by companies around the world, which will help to prevent market fragmentation.” He added: “The report shows that there has been significant momentum around adoption of and support for the TCFD’s recommendations, while also highlighting and making proposals to address challenges to more consistent and robust implementation.”

“The work that governments and businesses are doing to address the devastation caused by the coronavirus is also an opportunity to build a stronger, more resilient, and more sustainable economy – and transparency and disclosure have an important role to play,” said Michael R. Bloomberg, Chair of the Task Force and Founder of Bloomberg LP and Bloomberg Philanthropies. “The more companies know about their risks and opportunities related to climate change, and the more information investors have, the better we’ll be able to allocate resources and make progress – so it’s encouraging to see leaders in the public and private sector implementing the Task Force recommendations, as outlined in this report.”

The TCFD has also published today guidance on climate-related scenario analysis and on integrating climate-related risks into existing risk management processes, as well as a public consultation on forward-looking climate metrics for financial firms. The FSB has asked the TCFD to publish a further status report in September 2021 and undertake further analysis on the extent to which companies describe the financial impact of climate-related risks and opportunities on their businesses and strategies. The TCFD also plans to gain better insight into reporting practices of asset managers and asset owners to their clients and beneficiaries.

Notes to editors

The FSB is currently assessing the channels through which physical and transition risks could impact the financial system and how they might interact. Work is focused on the potential amplification mechanisms and cross-border effects, and to prioritising channels that could materialise in the short-to-medium term.

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 Randal K. Quarles, Vice Chairman, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

2020 Status Report: Task Force on Climate-related Financial Disclosures

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This report from the Task Force on Climate-related Financial Disclosures (TCFD) is an annual report on TCFD-aligned disclosures by firms.

The TCFD was established by the FSB in 2015 to develop a set of voluntary, consistent disclosure recommendations for use by companies in providing information to investors, lenders and insurance underwriters about their climate-related financial risks. The industry members of the TCFD, who are drawn from a wide range of industries and countries from around the globe, finalised the recommendations in 2017 after extensive public engagement and consultation. They set out the disclosures that a wide range of users and preparers of financial filings have said are essential to understanding a company’s climate-related risks and opportunities.

Since then, more than 1,500 organisations have expressed their support for the TCFD recommendations, an increase of over 85% since the 2019 status report. Nearly 60% of the world’s 100 largest public companies support the TCFD, report in line with the TCFD recommendations, or both. The latest status report finds that disclosure of climate-related financial information aligned with the TCFD recommendations has steadily increased since the recommendations were published in 2017. However, the report highlights the continuing need for progress in improving levels of TCFD-aligned disclosures given the urgent demand for consistency and comparability in reporting. The TCFD found that:

  • On average across the TCFD recommendations, 42% of companies with a market capitalisation greater than $10 billion disclosed at least some information in line with each individual TCFD recommendation in 2019.
  • Nearly 60% of the world’s 100 largest public companies support the TCFD, report in line with the TCFD recommendations, or both.
  • Energy companies and materials and buildings companies are leading on disclosure, with an average level of TCFD-aligned disclosures of 40% for energy companies and 30% for materials and buildings companies in fiscal year 2019.
  • Expert users of disclosure identified the impact of climate change on a company’s business and strategy as the “most useful” information for financial decision-making. Notably, this information has the lowest level of disclosure across the recommendations, with just one in 15 companies making this disclosure.
  • Asset manager and asset owner reporting to their clients and beneficiaries is likely insufficient.

The report also provides a ‘roadmap’ for preparers through highlighting insights from expert users on which information is most useful for decision making.

The TCFD also published guidance on climate-related scenario analysis for non-financial firms and on integrating climate-related risks into existing risk management processes. Additionally, the TCFD published a public consultation on forward-looking climate metrics for financial firms; responses to the consultation are due by 27 January 2021.

The FSB has asked the TCFD to publish a further status report in September 2021 and undertake further analysis on the extent to which companies describe the financial impact of climate-related risks and opportunities on their businesses and strategies. The TCFD also plans to gain better insight into reporting practices of asset managers and asset owners to their clients and beneficiaries.

FSB virtual workshops on FinTech issues

28 October 2020 | PDF full text (272 KB)

Register for the FSB’s FinTech virtual workshops on 4 and 5 November from 13.00-15.00 (CET).

The objective of the workshop on 4 November is to present the FSB’s work on the use of supervisory (SupTech) and (RegTech) regulatory technology by authorities and regulated institutions. The workshop will consider issues raised in the FSB’s recent report on this topic.

The objective of the workshop on 5 November is to present the FSB’s work on the provision of financial services by BigTech firms in emerging market and developing economies, based on the FSB’s recent publication on this topic.

Effective Practices for Cyber Incident Response and Recovery: overview of public consultation

19 October 2020 | PDF full text (147 KB)

Summary of document history

Summary of document history

On 20 April 2020, the FSB published a consultative document on Effective Practices for Cyber Incident Response and Recovery. The FSB received 58 responses to the public consultation from banks, insurers, industry associations and public authorities. In addition, the FSB held four virtual outreach meetings in early July, reaching out to over 300 private sector participants, to receive feedback on lessons learnt from the COVID-19 pandemic and on the consultative document.

This note summarises the main points from the responses, including to the specific questions set out in the consultation, and provides an overview of the response to those comments, including changes made to the recommendations.

Effective Practices for Cyber Incident Response and Recovery: Final report

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Summary of document history

Summary of document history

Cyber incidents pose a threat to the stability of the global financial system, and the remote working environments in light of the COVID-19 pandemic have heightened the need for attention. A significant cyber incident, if not properly contained, could seriously disrupt the financial system, including critical financial infrastructure, leading to broader financial stability implications. Efficient and effective response to and recovery from a cyber incident is essential to limiting any related financial stability risks. Such risks could arise, for example, from interconnected information technology systems between multiple financial institutions or between financial institutions and third-party service providers from loss of confidence in a major financial institution or group of financial institutions, or from impacts on capital arising from losses due to the incident. The cyber resilience of organisations is crucial for the smooth functioning of the financial system and in engendering financial stability.

Enhancing cyber incident response and recovery at organisations is an important focus for national authorities. National authorities are in a unique position to gain insights on effective cyber incident response and recovery activities in financial institutions from their supervisory work, and their observations across multiple organisations can help suggest areas for enhancement. Authorities also have an important role to play in responding to cyber incidents that present potential risks to financial stability. Authorities may also, as appropriate, support organisations in sharing information to protect against threats that could have a detrimental impact on financial stability.

The toolkit includes 49 practices for effective cyber incident response and recovery across seven components: (i) governance, (ii) planning and preparation, (iii) analysis, (iv) mitigation, (v) restoration and recovery, (vi) coordination and communication, and (vii) improvement. The final toolkit draws on the feedback from a public consultation process, including four virtual outreach meetings. The report was delivered to G20 Finance Ministers and Central Bank Governors for their October meeting.

This final version of the toolkit drew on feedback provided during a public consultation, including four virtual stakeholder workshops. The report was delivered to G20 Finance Ministers and Central Bank Governors for their October meeting.

FSB encourages use of cyber incident response and recovery toolkit

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Ref no: 41/2020

The Financial Stability Board (FSB) today published a toolkit of effective practices for financial institutions’ cyber incident response and recovery. The FSB encourages authorities and organisations to use the toolkit to enhance their cyber incident response and recovery activities.

Cyber incidents pose a threat to the stability of the global financial system, and the remote working environments in light of the COVID-19 pandemic have heightened the need for attention. A significant cyber incident, if not properly contained, could seriously disrupt the financial system, including critical financial infrastructure, leading to broader financial stability implications. Efficient and effective response to and recovery from a cyber incident is essential to limiting any related financial stability risks. Such risks could arise, for example, from interconnected information technology systems between multiple financial institutions or between financial institutions and third-party service providers from loss of confidence in a major financial institution or group of financial institutions, or from impacts on capital arising from losses due to the incident. The cyber resilience of organisations is crucial for the smooth functioning of the financial system and in engendering financial stability.

Enhancing cyber incident response and recovery at organisations is an important focus for national authorities. National authorities are in a unique position to gain insights on effective cyber incident response and recovery activities in financial institutions from their supervisory work, and their observations across multiple organisations can help suggest areas for enhancement. Authorities also have an important role to play in responding to cyber incidents that present potential risks to financial stability. Authorities may also, as appropriate, support organisations in sharing information to protect against threats that could have a detrimental impact on financial stability.

The toolkit includes 49 practices for effective cyber incident response and recovery across seven components: (i) governance, (ii) planning and preparation, (iii) analysis, (iv) mitigation, (v) restoration and recovery, (vi) coordination and communication, and (vii) improvement. The final toolkit draws on the feedback from a public consultation process, including four virtual outreach meetings. The report was delivered to G20 Finance Ministers and Central Bank Governors for their October meeting.

The FSB also published today an overview of the main issues raised in its public consultation, and describes the changes made to the final toolkit to address them.

Notes to editors

In 2017, the FSB published a Summary Report on Financial Sector Cybersecurity Regulations, Guidance and Supervisory Practices, as an initial step to promote cross-border cooperation in this area.

In 2018, the FSB published a Cyber Lexicon, which comprises a set of approximately 50 core terms related to cyber security and cyber resilience in the financial sector. It is intended to support the work of the FSB, standard-setting bodies, authorities and private sector participants, e.g. financial institutions and international standards organisations, to address financial sector cyber resilience.

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 Randal K. Quarles, Vice Chairman, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Effective Practices for Cyber Incident Response and Recovery

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The FSB has developed a toolkit of effective practices that aims to assist organisations in their cyber incident response and recovery activities. In this regard, organisations’ respond function executes the appropriate activities in reaction to a detected or reported cyber incident, while the recover function carries out the appropriate activities to restore any systems, capabilities or resume services or operations that were impaired due to a cyber incident.

The toolkit includes 49 practices for effective cyber incident response and recovery across seven components: (i) governance, (ii) planning and preparation, (iii) analysis, (iv) mitigation, (v) restoration and recovery, (vi) coordination and communication, and (vii) improvement. The final toolkit draws on the feedback from a public consultation process, including four virtual outreach meetings. The report was delivered to G20 Finance Ministers and Central Bank Governors for their October meeting.