Progress on the Transition to Risk-Free Rates

10 April 2019 | PDF full text (76 KB)

Speaking at an FSB roundtable on reform of major interest rate benchmarks in Washington DC, hosted by the Commodity Futures Trading Commission, FSB Chair Randal K. Quarles and Federal Reserve Board Vice-Chairman of Supervision, set out the need for a smooth transition to risk-free rates from LIBOR. 

Other speakers at the event included:

  • Andrew Bailey (CEO, UK Financial Conduct Authority and Co-chair, FSB Official Sector Steering Group)
  • Craig Phillips (Counsellor to the Secretary, U.S. Treasury)
  • J. Christopher Giancarlo (Chairman, U.S. Commodity Futures Trading Commission)
  • Sir David Ramsden (Deputy Governor, Bank of England)
  • Tom Wipf (Chairman of the MRAC Interest Rate Benchmark Reform Subcommittee and Vice Chairman of Institutional Securities, Morgan Stanley)
  • Beth Hammack (Global Treasurer, Goldman Sachs)
  • Tom Deas (Chairman, National Association of Corporate Treasurers)
  • Patrick McCoy (immediate past President, Government Finance Officers Association and Director of Finance, Metropolitan Transit Authority)

FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: April 2019

9 April 2019 | PDF full text (284 KB)

This letter from FSB Chair Randal K. Quarles to G20 Finance Ministers and Central Bank Governors was sent ahead of their meeting in Washington DC on 11-12 April 2019. The letter addresses four key issues:

  • Addressing new and emerging vulnerabilities in the financial system – the FSB will continue to scan the horizon to identify and assess emerging risks. While the core of the financial system is considerably more resilient than it was a decade ago, potential vulnerabilities in the financial system persist, and in some cases have built up further. Loosening lending standards, elevated asset values, and high corporate and public debt call for particular vigilance.

  • Finalising and operationalising post-crisis reforms – the FSB will work with standard-setting bodies to complete the few remaining reform items. The FSB will continue to support full, timely and consistent implementation of the agreed post-crisis reforms. Work on addressing structural vulnerabilities from asset management activities will continue.

  • Evaluating the effects of the reforms – the FSB is currently examining the effects on the financing of small and medium-sized enterprises, and has just started to evaluate the effects of too-big-to-fail reforms in the banking sector. The FSB, is exploring issues around market fragmentation, supporting the Japanese G20 Presidency’s priority to address this topic.

  • Reinforcing outreach to stakeholders – the FSB remains committed to improve communication and transparency with other external stakeholders, to increase understanding of the FSB’s work and facilitate greater input from a wide array of stakeholders.

FSB Chair writes to G20 Finance Ministers and Central Bank Governors

Press enquiries:
+41 61 280 8138
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Ref no: 6/2019

The Financial Stability Board (FSB) today published a letter from its Chair Randal K. Quarles to G20 Finance Ministers and Central Bank Governors ahead of their meeting in Washington DC this week. The letter provides an update on the FSB’s work and discusses current vulnerabilities in the financial system.

The letter sets a number of key themes:

  • Addressing new and emerging vulnerabilities in the financial system – the FSB will continue to scan the horizon to identify and assess emerging risks. While the core of the financial system is considerably more resilient than it was a decade ago, potential vulnerabilities in the financial system persist, and in some cases have built up further. Loosening lending standards, elevated asset values, and high corporate and public debt call for particular vigilance.

  • Finalising and operationalising post-crisis reforms – the FSB will work with standard-setting bodies to complete the few remaining reform items. The FSB will continue to support full, timely and consistent implementation of the agreed post-crisis reforms. Work on addressing structural vulnerabilities from asset management activities will continue.

  • Evaluating the effects of the reforms – the FSB is currently examining the effects on the financing of small and medium-sized enterprises, and has just started to evaluate the effects of too-big-to-fail reforms in the banking sector. The FSB, is exploring issues around market fragmentation, supporting the Japanese G20 Presidency’s priority to address this topic.

  • Reinforcing outreach to stakeholders – the FSB remains committed to improve communication and transparency with other external stakeholders, to increase understanding of the FSB’s work and facilitate greater input from a wide array of stakeholders.

Notes to editors

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 for Supervision, 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.

Crypto-assets regulators directory

5 April 2019 | PDF full text (532 KB)

This directory provides information on the relevant regulators and other authorities in FSB jurisdictions and international bodies who are dealing with crypto-asset issues, and the aspects covered by them.

The publication of the directory is part of ongoing work by the FSB and standard-setting bodies on crypto-assets.

FSB publishes directory of crypto-assets regulators

Press enquiries:
+41 61 280 8138
[email protected]
Ref no: 5/2019

The Financial Stability Board (FSB) published today a Crypto-assets regulators directory. The purpose of the directory is to provide information on the relevant regulators and other authorities in FSB jurisdictions and international bodies who are dealing with crypto-asset issues, and the aspects covered by them. The directory will be delivered to the G20 Finance Ministers and Central Bank Governors meeting on 11-12 April 2019.

Notes to editors

The publication of the directory is part of ongoing work by the FSB and standard-setting bodies on crypto-assets. In October 2018 the FSB released a report, Crypto-asset markets: Potential channels for future financial stability implications. The report concluded that crypto-assets do not pose a material risk to global financial stability at this time. However, vigilant monitoring is needed in light of the speed of market developments.

As that report noted, crypto-assets also raise several broader policy issues, such as the need for consumer and investor protection; strong market integrity protocols; anti-money laundering and combating the financing of terrorism (AML/CFT) regulation and supervision, including implementation of international sanctions; regulatory measures to prevent tax evasion; the need to avoid circumvention of capital controls; and concerns relating to the facilitation of illegal securities offerings. These risks are the subject of work at national and international levels.

The FSB undertakes regular monitoring of the financial stability implications of developments in crypto-assets using a framework developed in collaboration with the Committee on Payments and Market Infrastructures. The framework is described in the July 2018 report, Crypto-assets: Report to the G20 on the work of the FSB and standard-setting bodies.

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 for Supervision, 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.

Feedback on the effects of financial regulatory reforms on SME financing

26 March 2019

On 25 February 2019, the FSB invited feedback on the effects of financial regulatory reforms on SME financing. Interested parties were invited to provide written comments by 18 March 2019. The public comments received are available below.

Responses received

The feedback will be considered by the FSB as it prepares the draft report for its SME evaluation, which will be issued for public consultation ahead of the June 2019 G20 Summit. The final report, reflecting the feedback from the public consultation, will be published in October 2019.

FSB letter to ISDA about derivative contract robustness to risks of interest rate benchmark discontinuation

15 March 2019 | PDF full text (264 KB)

This letter from the Co-chairs of the FSB’s Official Sector Steering Group (OSSG) encourages the International Swaps and Derivatives Association (ISDA) to continue its work on derivatives contractual robustness to risks of interest rate determination. The letter raises three important issues that the OSSG believes ISDA is moving to address:

  • the addition of other trigger events;
  • the timing for an ISDA consultation on U.S. dollar (USD) LIBOR and certain other key Interbank Offered Rates IBORs;
  • the governance and transparency necessary as ISDA makes its final decisions.

The letter encourages ISDA to ask for market opinion on the events that would trigger a move to the spread-adjusted fallback rate for derivatives referencing IBORs. Triggers that would only take effect on the date on which LIBOR permanently or indefinitely stopped publication could leave those with LIBOR-referencing contracts still exposed to a number of risks. The OSSG also understands that ISDA intends to consult on USD LIBOR, CDOR, HIBOR and SOR in early 2019, and the OSSG strongly supports this. The OSSG Co-chairs also encourage ISDA to consult on the key technical details that ISDA’s Board Benchmark Committee will need to decide on before implementation can begin.

The FSB and member authorities through the OSSG are working to implement and monitor the recommendations of the 2014 FSB report Reforming Major Interest Rate Benchmarks.

Since July 2016, ISDA has undertaken work, at the request of the OSSG, to strengthen the robustness of derivatives markets to the discontinuation of widely-used interest rate benchmarks. The OSSG engages regularly with ISDA and other stakeholders with a view to their taking action to enhance contractual robustness in derivatives products and cash products, such as loans, mortgages and floating rate notes.

FSB compensation workshop: Key takeaways

8 March 2019 | PDF full text (238 KB)

This note provides key takeways from a workshop with banks in October 2018 about implementation of the FSB’s international standards on compensation. As part of its work to monitor implementation of its Principles for Sound Compensation Practices and their Implementation Standards the FSB engages regularly with firms across financial sectors to assess the extent to which the standards have been effectively implemented. This workshop focused on: 

  1. Big picture – a decade on from the crisis – the baseline for banks before reforms, how compensation structures have changed since the crisis and thoughts on further changes in the coming years.

  2. Implementation by banks of the FSB’s Principles and Standards on compensation – the practical steps banks have taken to implement reforms on compensation practice including details on which individuals are designated as material risk takers.

  3. Effectiveness – steps banks are taking to assess the effectiveness of current compensation policies and practices in terms of better aligning risk and reward.

Executives responsible for managing processes related to compensation at 17 large internationally active banks and officials from the FSB Compensation Monitoring Contact Group participated in the workshop.

The workshop provides one input into the FSB’s biennial compensation progress report that will be published later in 2019.

The FSB welcomes any feedback on topics discussed at the workshop and summarised in this note. Comments should be sent by Tuesday 7 May 2019 to [email protected].