FSB Details Work on NBFIs, Climate, Crypto

In his first letter to G20 finance ministers and central bankers, Chairman Klaas Knot of The Netherlands reiterated work on longstanding FSB priorities (i.e., ensuring resilience and a smooth post-pandemic transition).  Pending actions include a mid-year report on ways to ensure inclusive financial recovery and continuing work on MMFs, open-end funds, margining, bond-market liquidity, and EME dollar-funding vulnerabilities.  Near-term work will also revisit 2017 standards on asset-management liquidity (see FSM Report ASSETMANAGEMENT6) and create a set of systemic-risk tools focused on NBFIs.

FSI Counters FSB plans for Climate Macroprudential Standards

Although the FSB chairman earlier today argued in favor of climate-risk macroprudential standards, a report from the BIS’s Financial Supervision Institute today concludes that doing so would be ineffective and even counter-productive. This is due to uncertainty about the extent to which climate-risk systemic implications may already be well addressed in current macroprudential standards or to those now under development with specific regard to individual institutions.  The FSI, for example, notes the data challenges that also trouble the OCC (see FSM Report GREEN12) and other U.S. regulators, arguing against any near-term binding capital or prudential standards in this arena.