GFS LinkedIn
GFS Facebook
GFS Twitter
GFS RSS feed

FSB: More work on systemic risks

Thursday 27 October 2011 - by Andrew Hickley | 8:00pm BST

More work needs to be done to improve the implementation of frameworks to monitor and prevent systemic risk, the Financial Stability Board has declared.

While "important steps" have already been taken in developing macroprudential tools, systemic risk monitoring and on improving economic governance, global regulators' inexperience in tackling systemic risk oversight means that further improvements need to be made.

In a progress report requested by G20 leaders in November 2010, unveiled on Thursday, the FSB argues that systemic risk oversight and prevention represents a "nascent field" where "no common paradigms as yet exist".

As a result, three broad steps are needed by different governments to help their pursuit of maintaining financial stability.

"Further fundamental and applied research is needed, not least to better inform the collection and analysis of data underway," the FSB says.


"Second, newly introduced tools will need to be tried out in different circumstances and their performance evaluated against expectations.

"Finally, many jurisdictions still lack specific institutional arrangements for the conduct of macroprudential policy and those that have recently introduced them will need to gather experience on their performance."

The report does however point to areas of international agreement, such as the Basel III countercyclical capital buffer and extra loss absorbency requirements for banks, as encouraging signs of global progress to contain systemic risks.

It notes that efforts have focused on closing data gaps and on developing better indicators to assess systemic risk. These steps have come both from within the banking sector and in the so-called shadow banking system.

The progress report points to developments in Europe and the US to build committees that analyse systemic risk build-ups - the European Systemic Risk Board and the Financial Stability Oversight Council respectively.

These groups combine the findings of their central banks, securities, banking, and insurance regulators, among others, in an effort to find underlying causes for concern and devise measures to counter these weaknesses.


Article pages: |   1  |  2  |



WHAT DO YOU THINK?
 
Name:
   
Email:
   
Comment:
   
Post as Anonymous
  Display name
   
Please, enter security code
   
 

No comments yet.
INTERVIEWS & FEATURES
What corruption really costs
Heidi Lawson, partner at Chadbourne & Parke LLP, looks at the impact of compliance and corruption on a company's value.

STRAW POLL

Will markets in 2012 have a tougher time than 2011?

Yes

No

Don't know

View results

FIND A REGION world regions