FSB digs into crypto-assets, cyber resilience and data ahead of G20 summit

As part of its regular risk assessment, the Financial Stability Board (FSB) plenary discussed market developments and vulnerabilities in the global financial system, and progress against its 2018 workplan for delivery to the Argentine G20 Summit in November. The G20 Finance Ministers and Central Bank Governors asked the FSB to update the G20 at its July meeting on its work and that of the standard-setting bodies (SSBs) together with a report from the Financial Action Task Force.

The plenary discussed progress on crypto-assets deliverables. While the FSB assesses that crypto-assets do not pose a risk to global financial stability at this time, they raise a host of issues around consumer and investor protection, as well as their use to shield illicit activity, money laundering and terrorist financing. The plenary agreed on a framework to monitor potential emerging financial stability risks of crypto-assets.

Members also received an update on the ongoing work by the Basel Committee on Banking Supervision, Committee on Payments and Market Infrastructures and International Organization of Securities Commissions (IOSCO) on their work on crypto-assets, including monitoring bank exposures, work on applications of the underlying technologies and use in payments, and considering issues stemming from initial coin offerings and crypto-asset exchanges that could impact investor or consumer protection. The FSB will publish a summary of its work and that of the SSBs on crypto-assets ahead of the July meeting of G20 Finance Ministers and Central Bank Governors.

Under the banner of cyber resilience, members discussed the macro-financial implications of operational and cyber risks and current challenges for supervisors in overseeing cyber risk management in internationally active financial institutions. The plenary approved for publication in July a consultation paper on the common cyber lexicon the FSB has developed. The cyber lexicon is intended to support the FSB, SSBs, authorities and private sector participants in addressing cybersecurity issues and enhancing cyber resilience in the financial sector.

There was also discussion about a draft framework for FSB collection and handling of firm-level non-public data. The FSB collects such data as part of its work to assess vulnerabilities, develop policies, monitor implementation and evaluate the effects of reforms, when data are not available from other sources. The Plenary has agreed to develop a framework that sets out robust processes for the collection and handling of such data in order to protect the confidentiality of the data.

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