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A year in the life of the Financial Stability Board

Sunday 28 March 2010 - by Mark Twigg


Peer group review is a central part of the FSB’s tool kit for improving compliance with international standards. Andresen foresees a “race to the top” in which the The FSB’s membership will be seen to lead by example. The work of the peer group review on compensation will report shortly.

In the area of information exchange and cooperation the work is at an earlier stage with the FSB having published its framework document in March this year. Work to develop that process is being closely watched across all financial markets, large and small. So what role can smaller international financial centres expect to play in informing this work going forward?

The relationship between the larger economic powers represented in the G20, and smaller international financial centres more likely to be found in the G77, is a particularly moot point, if not within the FSB, then certainly outside it. The public falling-out between France and China at the London Summit in April 2009 illustrated how politically charged the debate around offshore tax centres has become.

Given the sensitivities surrounding the nomenclature of terms like “offshore financial centres” and “tax havens”, Andresen understandably chooses his words carefully. Terms such as “offshore centres” are clearly not a relevant differentiator, he argues, given the wide scope of jurisdictions involved. He suggests that “large IFCs in small jurisdictions” might be considered more appropriate.


On the central point over how the FSB engages with small IFCs, he rejects the view that smaller international financial centres have not been able to play a full role.  Indeed, for international cooperation to succeed, no jurisdictions can be left behind.

Andresen says: “We have experienced a significant financial crisis. The international community can ill-afford not to cooperate. Developing international standards is not a question of seeking competitive advantage but of averting another financial crisis. No jurisdiction has anything to gain by not being part of this process.”

For those jurisdictions feeling threatened by the direction of travel, the need to deal with non-cooperative jurisdictions is not simply about carrying a big stick.

As the FSB’s framework document published in early March makes clear, the need for a sanctions regime is important, but more important is the need to examine how the international community can help assist NCJS to build the capacity of domestic supervisors and tax authorities in order to comply with the new global standards.


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