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.
- 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.
- 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.
||Auditor; B/D; Bank; Corp; Ins; MMF; MSB; SIFI
||Rp, PR 6/2021, 4/6/2021; Lt, 3/30/2021; COVID-19; ESG
||C-Suite; Financial; Reporting; Resolution; Risk; Treasury
||Global Regulator; Cross-Border
||Banking; Corporate; Cryptocurrency; Insurance; MMF: Money Market Fund; Payments; Securities
|Reg. Last Update
Last substantive update on 04/06/2021