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A year in the life of the Financial Stability Board

Sunday 28 March 2010 - by Mark Twigg

 As the Financial Stability Board approaches its first anniversary, secretary general Svein Andresen talks to GFS about what it has achieved and the mountain of work still to be done

A year on from April’s G20 London Summit, one of its most significant outcomes is celebrating its first anniversary.  

As was announced at the Leaders’ Summit, the expanded Financial Stability Forum was re-established as the Financial Stability Board with a broadened mandate to promote financial stability.

Ever since G7 ministers and governors endorsed the creation of the FSF in February 1999, it had sought to provide a means for coordinating the work of national authorities responsible for financial stability in significant international financial centres.

Like many elements of the regulatory architecture, the FSF was forced to adapt to the financial crisis.  

In November 2008, the Leaders of the G20 countries called for a larger membership of the FSF which in turn led to a broad consensus placing the FSF on stronger institutional ground.



Listening to FSB secretary general Svein Andresen list the FSB’s priorities for 2010 you soon realise the enormity of the challenge. Andresen says the major challenge undoubtedly rests with efforts to improve the Basel framework on capital standards and liquidity ensuring that the amended Basel regulations are calibrated appropriately, with the necessary transition and grandfathering arrangements. This will be central to the reforms in dealing with the financial crisis.  

In addition, the FSB will be concerned with efforts to address future moral hazard and reduce the risk of systemically important institutions failing through the use of capital surcharges and enhanced supervision. Allied to this, further work is underway to develop effective early warning systems, crisis resolution and in developing recovery plans for troubled banks which mitigate the need for future taxpayer funded bank bail outs.

Beyond this, it will be necessary to look at the effectiveness of market infrastructure particularly in the area of OTC derivatives and the need for central clearing. Securitisation markets too need to be revived.  


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