The Financial Stability Board’s work priorities are designed to promote global financial stability. Vigilant monitoring to identify, assess and address new and emerging risks to financial stability lies at the heart of the FSB’s activities and informs all of its other activities.
Another key FSB activity will be evaluating the effectiveness and efficiency of reforms that have been implemented over the last decade to ensure that the intended benefits are being achieved, and taking action to address any unintended consequences. This note summarises ongoing and planned initiatives in 2019 in these main areas of FSB work.
Addressing new and emerging vulnerabilities in the financial system
Preserving financial stability, and thereby supporting sustainable growth, requires the continued monitoring of developments in the global financial system. The FSB continues to scan the horizon to identify and assess emerging risks through regular discussion by its members of macro-financial developments, as well as through the biannual Early Warning Exercise conducted jointly with the International Monetary Fund (IMF).
The FSB will also continue to assess the impact of evolving market structures and of technological innovation on global financial stability. This includes the resilience of financial markets in stress, the implications of the growth of non-bank financial intermediation and operational issues such as cyber risks.
Fintech: the digitalization of finance has the potential to significantly change the current functioning of the global financial system, which raises a number of possible benefits and risks. The FSB will continue to monitor digitalization trends, to assist in harnessing the benefits while mitigating risks. This includes the regular monitoring of the financial stability implications of crypto assets and a discussion of supervisory and regulatory approaches to crypto assets and potential regulatory gaps in this area.
Moreover, the FSB’s Financial Innovation Network will further analyze the financial stability implications of technological innovation, such as the entry of large technology firms into finance and third-party dependencies from technology, as well as the financial stability implications of decentralised financial technologies.
Cyber resilience: in the digital age, cyber incidents are one potential threat to the financial system. The FSB will contribute to work to enhance cyber resilience. Building on the 2017 stocktake of regulatory and supervisory cybersecurity practices, the Standing Committee on Supervisory and Regulatory Cooperation (SRC) will work to identify, assess and report on best practices relating to a financial institution’s response to, and recovery from, a cyber incident. SCAV will continue to analyze the systemic consequences of operational and cyber incidents.