FSB Covid, Climate Updates to G20

On Apr. 6, FSB issued Covid letter, climate roadmap detail sent to G20.

  • FSB published chair Randal Quarles' letter to G20 ahead of its Apr. 7 virtual meeting.
  • Accompanied by an FSB report on factors to consider when extending, amending and ending Covid-19 policy support measures, with the aim of minimizing relevant risks.
  • Letter of Mar. 30, 2021, also notes importance of addressing climate change issues.
  • Covid
  • Most Covid policy support measures still in place, withdrawal is typically not imminent.
  • Vaccine rollout is a key flex point in pandemic, need to start thinking about whether to extend, amend and/or eventually end measures supporting financial system stability.
  • Report looks at policy considerations relating to unwinding of Covid support measures.
  • To assist G20 and policymakers by setting benchmark, noting FSB member practices.
  • Premature support withdrawal could damage economy more than carrying on too long.
  • Authorities should adjust/withdraw gradually, ensure measures target most affected.
  • Require beneficiaries to opt in, and make terms of support progressively less generous.
  • Sequence the withdrawal of support measures rather than withdrawing all at once.
  • Report also underlines the importance of a resilient and well-functioning financial system as a precondition for smooth adjustment as public Covid support is phased out.
  • More work needed to understand the risk of harmful cross-border, cross-sector issues.
  • Other Issues
  • Chair's letter also applauds progress made on too-big-to-fail (TBTF) reforms for banks, but can go further, notably on implementation of total loss absorbing capacity (TLAC).
  • Some risks have moved outside the banking system e.g. increasing role of non-bank financial intermediaries (NBFI); FSB has a workstream to address these vulnerabilities.
  • Will submit policy proposals to enhance money market fund resilience to G20 in July.
  • Climate Change
  • The FSB chair's letter notes importance of addressing issues related to climate change.
  • Three workstreams underway; data; disclosures; regulatory and supervisory practices.
  • FSB will provide G20 with two reports, first on ways to promote consistent high-quality climate disclosures in line with the Task force for climate-related financial disclosures.
  • Second on data necessary for assessment of financial stability risks, related data gaps.
  • Roadmap
  • FSB to present to G20 a coordinated roadmap to address climate-related financial risk.
  • This roadmap intended to be key to promoting rapid progress amongst jurisdictions.
  • The FSB has invited the Network for greening the financial system (NGFS) to participate in its climate-related work, FSB will apply for observer status in the NGFS.
  • FSB to coordinate with G20 sustainable finance group, working on broader roadmap.
  • FSB roadmap, work on climate-related disclosures, data, will go to the G20 in summer.

Regulators FSB G-20
Entity Types Auditor; B/D; Bank; Corp; Ins; MMF; MSB; SIFI
Reference Rp, PR 6/2021, 4/6/2021; Lt, 3/30/2021; COVID-19; ESG
Functions C-Suite; Financial; Reporting; Resolution; Risk; Treasury
Countries Global Regulator; Cross-Border
Products Banking; Corporate; Cryptocurrency; Insurance; MMF: Money Market Fund; Payments; Securities
Regions Global
Rule Type Guidance
Rule Date 4/6/2021
Effective Date 4/6/2021
Rule Id 102125
Linked to
Reg. Last Update 4/6/2021
Report Section International

Last substantive update on 04/06/2021