Central Banking interview on the FSB’s too-big-to-fail evaluation

12 August 2020

Claudia Buch (Vice-President of the Deutsche Bundesbank) spoke with Daniel Hinge (Central Banking) about the FSB’s evaluation on too-big-to-fail reforms.

Public responses to consultation on Guidance on financial resources to support CCP resolution and on the treatment of CCP equity in resolution

10 August 2020

Summary of document history

Summary of document history

On 4 May 2020, the FSB published a consultation document on Guidance on financial resources to support CCP resolution and on the treatment of CCP equity in resolution. Interested parties were invited to provide written comments by 31 July 2020. The public comments received are available below.

Responses received

The FSB thanks those who took the time and effort to express their views. The FSB expects to publish the final guidance by the end of 2020.

Public responses to consultation on Effective Practices for Cyber Incident Response and Recovery

4 August 2020

Summary of document history

Summary of document history

On 20 April 2020, the FSB published a consultation document on Effective Practices for Cyber Incident Response and Recovery. Interested parties were invited to provide written comments by 20 July 2020. The public comments received are available below.

Responses received

The FSB thanks those who took the time and effort to express their views. The FSB expects to publish the final toolkit of effective practices in October 2020.

FSB publishes peer review on macroprudential policy framework and tools in Germany

29 July 2020

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Ref no: 25/2020

The Financial Stability Board (FSB) today published its Peer Review of Germany. The review examines progress with data collection for macroprudential analysis and the availability and use of macroprudential tools in Germany; and how the authorities assess and manage risks to financial stability from non-bank financial intermediation (NBFI).

The review finds that Germany’s macroprudential framework is well established and operationalised through the Financial Stability Committee (FSC). Data collection, quality and integration have improved, and effective cooperation between the FSC’s member authorities – the Bundesbank, the Federal Financial Supervisory Authority (BaFin), and the Federal Ministry of Finance – has enhanced its analytical capabilities to assess financial stability risks. The FSC has further developed its macroprudential toolkit in recent years with the establishment of two borrower-based tools designed to address potential financial stability risks stemming from the residential real estate market. These tools apply to both banks and non-bank financial institutions, but so far have not been activated. The efforts of the authorities to monitor and manage risks to financial stability from NBFI have increased as the importance of the sector has grown, most notably with respect to investment funds, while the set of liquidity management and pricing tools available to asset managers was recently extended.

Notwithstanding this progress, the review concludes that further steps can be taken to strengthen the macroprudential framework by:

  • Enhancing data collection for macroprudential analysis, in particular on residential real estate loans, NBFI and interconnectedness;

  • Strengthening the FSC’s public communication and its analysis of non-bank and emerging risks; and

  • Extending the policy toolkit to include income-based instruments for residential real estate financing and providing guidance on the use of liquidity risk management and pricing tools for investment funds, particularly in stressed market conditions.

The peer review report includes recommendations to the German authorities in order to address these issues.

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 thematic and country reviews, based on the objectives and guidelines set out in the Handbook for FSB Peer Reviews. As part of this commitment, Germany volunteered to undergo a peer review in 2019. This review forms part of the second round of country peer reviews of FSB member jurisdictions, which examine the implementation of G20 financial regulatory reforms. The schedule of country peer reviews, as well as all completed peer review reports, is available on the FSB website.

The draft report was prepared by a team of experts from FSB member institutions and led by Ksenia Yudaeva, First Deputy Governor at the Central Bank of the Russian Federation. The review benefited from dialogue with the German authorities and private sector representatives as well as from discussion in the FSB Standing Committee on Standards Implementation. As the review largely took place prior to the COVID-19 pandemic, it does not examine in depth recent market developments or the related actions by the German authorities.

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.

Peer Review of Germany

| PDF full text (750 KB)

Germany’s macroprudential framework is well established and operationalised.

This peer review examines progress with data collection for macroprudential analysis and the availability and use of macroprudential tools in Germany; and how the authorities assess and manage risks to financial stability from non-bank financial intermediation (NBFI).

The review finds that Germany’s macroprudential framework is well established and operationalised through the Financial Stability Committee (FSC). Data collection, quality and integration have improved, and effective cooperation between the FSC’s member authorities – the Bundesbank, the Federal Financial Supervisory Authority (BaFin), and the Federal Ministry of Finance – has enhanced its analytical capabilities to assess financial stability risks. The FSC has further developed its macroprudential toolkit in recent years with the establishment of two borrower-based tools designed to address potential financial stability risks stemming from the residential real estate market. These tools apply to both banks and non-bank financial institutions, but so far have not been activated. The efforts of the authorities to monitor and manage risks to financial stability from NBFI have increased as the importance of the sector has grown, most notably with respect to investment funds, while the set of liquidity management and pricing tools available to asset managers was recently extended.

Notwithstanding this progress, the review concludes that further steps can be taken to strengthen the macroprudential framework by:

  • Enhancing data collection for macroprudential analysis, in particular on residential real estate loans, NBFI and interconnectedness;

  • Strengthening the FSC’s public communication and its analysis of non-bank and emerging risks; and

  • Extending the policy toolkit to include income-based instruments for residential real estate financing and providing guidance on the use of liquidity risk management and pricing tools for investment funds, particularly in stressed market conditions.

The peer review report includes recommendations to the German authorities in order to address these issues.

Public responses to consultation on Addressing the regulatory, supervisory and oversight challenges raised by “global stablecoin” arrangements

24 July 2020

Summary of document history

Summary of document history

On 14 April 2020, the FSB published a consultation document on Addressing the regulatory, supervisory and oversight challenges raised by “global stablecoin” arrangements. Interested parties were invited to provide written comments by 15 July 2020. The public comments received are available below.

Responses received

The FSB thanks those who took the time and effort to express their views. The FSB expects to publish a summary of findings and final recommendations in October 2020.

Stocktake of financial authorities’ experience in including physical and transition climate risks as part of their financial stability monitoring

22 July 2020 | PDF full text (508 KB)

This stocktake considers financial authorities’ experience of including climate-related risks in financial stability monitoring. It draws on information provided by FSB members, international bodies and a workshop with the private sector.

The stocktake finds that financial authorities vary in terms of whether – and to what degree – they consider climate-related risks as part of their financial stability monitoring. Around three-quarters of survey respondents consider, or are planning to consider, climate-related risks as part of their financial stability monitoring. Most focus on the implications of changes in asset prices and credit quality. A minority of authorities also consider the implications for underwriting, legal, liability and operational risks.

Inclusion of climate-related risks in financial stability monitoring

Inclusion of climate-related risks in their financial stability monitoring : Do you consider risks from climate change as part of your financial stability monitoring?

Authorities also consider the implications of these risks for financial institutions. Consideration of climate-related credit and market risks faced by banks and insurers appears more advanced than that of other risks, or of risks faced by other types of financial institutions. Some financial authorities have quantified, – or have work underway to quantify – climate-related risks. Such work is hindered by a lack of consistent data on financial exposures to climate risks and difficulties translating climate change outcomes into changes in those exposures. No approach to quantification provides a holistic assessment of climate-related risks to the global financial system.

In some jurisdictions, climate-related risks are being integrated into microprudential supervision of banks and insurance firms (including via requirements for firms’ stress testing and disclosure). However, such work is generally at an early stage. Some authorities report having set out – or being in the process of setting out – their expectations as to firms’ disclosure of climate-related risks. In some cases such expectations explicitly refer to the recommendations of the FSB’s Task Force on Climate-related Financial Disclosures.

The stocktake draws on takeaways from discussions with the private sector. At a workshop market participants said that climate-related risks were significant and had the potential to impact their businesses. However, they said it is unclear whether – and to what degree – financial market prices incorporate climate-related risks. The workshop included discussion of the channels through which climate-related risks to the financial system may affect the real economy, and, in turn, have further effects on the financial system.

The FSB will conduct further work by October 2020 to assess the channels through which physical and transition risks could impact the financial system and how they might interact. Particular focus will be given to the potential amplification mechanisms and cross-border effects, and to prioritising channels that could materialise in the short-to-medium term. The FSB will also consider the scope for work to assess available data through which climate-related risks can be monitored, as well as any data gaps. This work will build upon, and be coordinated with, that taking place in other relevant international fora.

FSB stocktake considers climate risks and financial stability

Press enquiries:
+41 61 280 8138
[email protected]
Ref no: 24/2020

The Financial Stability Board (FSB) today published a stocktake of financial authorities’ experience in including climate-related risks in financial stability monitoring. It draws on information provided by FSB member national authorities, international bodies and a workshop with the private sector.

The stocktake finds that financial authorities vary in terms of whether – and to what degree – they consider climate-related risks as part of their financial stability monitoring. Around three-quarters of survey respondents consider, or are planning to consider, climate-related risks as part of their financial stability monitoring. Most focus on the implications of changes in asset prices and credit quality. A minority of authorities also consider the implications for underwriting, legal, liability and operational risks.

Authorities also consider the implications of these risks for financial institutions. Consideration of climate-related credit and market risks faced by banks and insurers appears more advanced than that of other risks, or of risks faced by other types of financial institutions. Some financial authorities have quantified – or have work underway to quantify – climate-related risks. Such work is hindered by a lack of consistent data on financial exposures to climate risks and difficulties translating climate change outcomes into changes in those exposures. No approach to quantification provides a holistic assessment of climate-related risks to the global financial system.

In some jurisdictions, climate-related risks are being integrated into microprudential supervision of banks and insurance firms (including via requirements for firms’ stress testing and disclosure). However, such work is generally at an early stage. Some authorities report having set out – or being in the process of setting out – their expectations as to firms’ disclosure of climate-related risks. In some cases such expectations explicitly refer to the recommendations of the FSB’s Task Force on Climate-related Financial Disclosures.

The FSB will conduct further work by October 2020 to assess the channels through which physical and transition risks could impact the financial system and how they might interact. Particular focus will be given to the potential amplification mechanisms and cross-border effects, and to prioritising channels that could materialise in the short-to-medium term. The FSB will also consider the scope for work to assess available data through which climate-related risks can be monitored, as well as any data gaps. This work will build upon, and be coordinated with, that taking place in other relevant international fora.

Notes to editors

The 18 July 2020 communique of the G20 Finance Ministers and Central Bank Governors notes that the FSB is continuing to examine the financial stability implications of climate change.

In April 2015 the G20 asked the FSB to consider climate risk and in December 2015 the FSB launched the industry-led Task Force on Climate-related Financial Disclosures (TCFD) to develop recommendations on climate-related financial disclosures. The Task Force published its final recommendations in June 2017. The TCFD will publish its next status report in November.

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.