The Financial Stability Board (FSB) today published a letter from Chair Andrew Bailey to G20 Finance Ministers and Central Bank Governors ahead of their meeting on 17-18 July. In his first letter, Bailey calls for continued global cooperation and engagement, particularly against the backdrop of geopolitical tensions and rising fragmentation risk. Bailey outlines his priorities for the FSB, notably: • Enhancing surveillance capabilities: the FSB and national authorities’ assessment tools and surveillance capabilities must adapt to the evolving financial system to detect vulnerabilities and allow a targeted, evidence-based response to risks. As part of this, the FSB is to set out concisely - and publish - its assessments of vulnerabilities. • Addressing key risks to financial stability: alongside giving more focus to existing initiatives such as the G20 cross-border payments roadmap, the FSB will: (i) support robust implementation of agreed policies on Nonbank Financial Intermediation (NBFI); (ii) explore vulnerabilities from the growing role of private finance; (iii) assess the increasing role of stablecoins for payment and settlement purposes. • Strengthening the effectiveness of the FSB: the G20 Implementation Monitoring Review will be the starting point for considering possible improvements in the FSB effectiveness, not just with regard to the implementation of agreed standards, but also in other areas such as communicating with stakeholders outside of its membership. The letter covers three reports the FSB is delivering to the G20: (i) the FSB’s policy recommendations to address financial stability risks created by leverage in nonbank financial intermediation, (ii) a workplan to address challenges related to nonbank data – both of which were published last week; and (iii) a report updating on work conducted under the FSB Climate roadmap and outlining the FSB’s medium-term approach to potential climate-related financial risks, delivered together with the chair’s letter. Redisseminated by The Asian Banker
