Financial Stability Board (FSB)

🌎 Our Regional Consultative Group for the Americas met on 7 and 8 October in Santiago, Chile. https://bit.ly/3ByhTBv After a workshop dedicated to macroprudential policies, our Americas Group discussed vulnerabilities in the region, ranging from the impact of recent monetary loosening to that of the latest hurricane season. Members reviewed some of the FSB’s recent initiatives, for example our stocktake on nature-related risks, but also the work to promote greater alignment and interoperability in data frameworks related to cross-border payments. This latter workstream has the potential to promote open finance, and also improve anti-money laundering and countering the financing of terrorism (AML/CFT) processes, sanctions screening, and fraud detection. Operational resilience was also discussed, especially in the light of the CrowdStrike failure. The FSB has produced a toolkit to help financial institutions to monitor, identify and manage risks arising from third-party services, and is working to promote greater convergence in cyber incident reporting. We would like to thank Banco Central de Chile and Comisión para el Mercado Financiero (CMF) for being our hosts in Santiago. Read Governor Rosanna Costa's welcoming remarks: https://bit.ly/3XWeeFb Learn about our regional outreach activities: https://bit.ly/3ZWvYCX #FSB #ClimateRisks #DigitalPayments #OpenFinance #CyberIncidents

Great being in Rome for the FSB-Banca d'Italia - Eurosistema workshop on data frameworks related to cross-border payments. Data is increasingly important in today’s digital world and – as highlighted by our Deputy Secretary General Martin Moloney - data regulation is likely to become as important a feature of global regulation as is financial regulation itself. Increasingly sophisticated frameworks for the regulation of data are emerging across the world, for example to protect data privacy and to counter the financing of terrorism. Last summer, in the context of the G20 Roadmap for Enhancing Cross-Border Payments, we suggested ways to promote greater alignment and interoperability across data frameworks relating to cross-border payments. https://bit.ly/4eUI5EU At this week’s workshop, we took stock of the feedback received on those recommendations. We also discussed how authorities can further address any frictions that data frameworks may create on the road towards faster, cheaper, more transparent and accessible cross-border payments, without compromising the frameworks' objectives. Interested in cross-border payments? Stay tuned for our forthcoming progress reports on the G20 roadmap and on cross-border payments quantitative targets. #FSB #CrossBorderPayments #DataRegulation

Coming up next week - our Deputy Secretary General Martin Moloney speaks at the ISDA Derivatives Trading and Treasury Forum 👇

The use of Artificial Intelligence (AI) is expanding across the financial system. AI can enhance efficiencies and create value for all participants, including supervisors, but it also introduces new risks. Experts at a recent roundtable organised by the FSB and the Organisation for Economic Co-operation and Development (OECD - OCDE) delved into how policymakers can ensure that innovation is balanced with safety and stability. 🌐 https://lnkd.in/eRkJqRPd The growing adoption of AI technologies by banks, insurers, and asset managers is bringing efficiency gains in areas such as risk modelling, trading, claims handling, fraud detection, and financial crime prevention. Currently, the use of generative AI in finance does not seem transformational for regulated financial institutions, as it primarily focuses on operational efficiency improvements and remains largely exploratory. Supervisors are also benefiting from AI, gaining an enhanced capacity to manage large volumes of data. Despite these benefits, the use of AI raises concerns related to model risk, data protection, governance, privacy, and ethics. It may also pose financial stability risks due to its potential to amplify interconnections among financial firms, as well as concerns about the complexity and opacity of models and data. Policymakers should strive to promote the safe use of AI in financial services, particularly through global cooperation on standards and best practices. Interested in learning more about the financial stability implications of AI? Don't miss our upcoming in-depth report in November. #AIinFinance #MachineLearning #GenerativeAI #SupTech #FSB Business and Finance at the OECD

To our French-speaking followers - The Bank of France just published a Bulletin dedicated to the history, governance and work of the Financial Stability Board. 👇 Merci Banque de France ! #ConseildeStabilitéFinancière

We were happy to hold the meeting of the FSB’s Standing Committee on Assessment of Vulnerabilities (SCAV) in Basel earlier this month. The SCAV is the our main mechanism for identifying and assessing risks and vulnerabilities in the financial system, one of the key elements of the FSB's mandate. https://lnkd.in/eE_Dv37V Participants at the latest SCAV meeting discussed the financial stability implications of current economic and financial developments, including analysis on artificial intelligence, tokenisation, and climate change. The SCAV is currently chaired by Nellie Liang from the U.S. Department of the Treasury, and brings together representatives from national financial authorities, standard-setting bodies and international organisations. https://lnkd.in/eJvu3tMU #FinancialStability #FinancialStabilityBoard #AI #Tokenisation #ClimateRisks

“We cannot rely on periods of market stress to reveal vulnerabilities”, said our Secretary General John Schindler talking about the challenges of regulating non-bank financial intermediation (NBFI) in a speech at the Eurofi Financial Forum 2024 in Budapest yesterday. Non-bank financial entities are increasingly critical to the global financial system, having increased in size, complexity and importance. The rise of fintech and online lending platforms has introduced yet new forms of financial intermediation, often operating outside the traditional regulatory framework. Several recent episodes of stress have shown that problems at non-banks – be they investment funds, money market funds, prime brokers – can quickly spread to the broader financial system. “This […] requires us to consider not just the risks to individual investors or markets, but also the potential for systemic risks – risks that can have far-reaching implications for the global financial system and the global economy”, noted Mr Schindler. At the FSB we have been looking at specific entities and activities where vulnerabilities are more pronounced. In doing so, we are increasingly adopting a more targeted approach, focusing on markets or entities that are known to be potential amplifiers of shocks. Such an approach allows us to develop policies that are calibrated to the specific risks at play. But this requires more and better data. The FSB's Global Monitoring Report on NBFI has filled some gaps, providing insights into the size, composition, and main trends and risks in the sector. By working together, national and international regulators, as well as the non-bank sector, can improve data collection, reporting, and sharing practices, so as to ensure that non-banks remain a source of strength, rather than vulnerability, for the financial system. Read the full speech: https://lnkd.in/eX539bew Take a look at our Global Monitoring Report on NBFI: https://lnkd.in/eMapMhPv More information on the FSB’s work to address risks in NBFI is available on our website: https://lnkd.in/ednJwX5Z #NBFI #NonBanks #FinancialStability #DataGaps

The future financial architecture is being potentially reshaped by tokenization and artificial intelligence. But while we look at innovation, we must not lose sight of other shifts in the financial landscape that may also have significant effects. Watch our Secretary General, John Schindler, talk about tokenization, AI, non-bank financial intermediation and financial stability at the 2024 Global Economy and Financial Stability Conference hosted by the Bank of Korea and the Reinventing Bretton Woods Committee. ▶️ https://lnkd.in/e9fFYW8F #FinancialStability #tokenization #AI #Nonbanks

The transfer of data across borders is essential to the functioning of the #CrossBorderPayments system. Share your views on our proposals to align regulatory data requirements and make them more compatible across jurisdictions. The consultation ends in 4 days.

Our proposed recommendations seek to strengthen consistency between the regulatory and supervisory regimes for banks and non-banks providing cross-border payment services. We want to hear your views. Our consultation ends in 5 days.