In conjunction with spring financial meetings, the FSB has laid out its work plan for systemic regulations that will be finalized or readied for action by the G-20 summit in November. This report analyzes the status of key actions, which include an array of rules with significant strategic and financial-market impact. The head of the FSB, the BoE’s Mark Carney, indicated in his report that Basel has finalized the controversial credit-exposure rules (see FSM Report CONCENTRATION4) that will shortly be released. U.S. clients are advised that, when this happens, we expect the FRB quickly to move forward with its own single-counterparty credit limits (see FSM Report SYSTEMIC54). On the shadow-banking front, the FSB plans to finalize its universal-margin requirements (see FSM Report REPO3), but FedFin doubts these will satisfy the U.S. Other shadow-bank initiatives appear largely in abeyance judging by the FSB’s formal to-do list. The FSB’s top priority between now and November is to address TBTF, with Mr. Carney’s report diplomatically suggesting significant obstacles remain to crafting harmonious cross-border contingency-debt/capital rules and resolution protocols. Reflecting these and broader worries, Treasury Secretary Lew yesterday argued that progress to date in the EU on regulation and resolution, while encouraging, is not sufficient. Mr. Lew also sought to reassure global financial officials of the U.S. commitment to IMF reform despite continued obstacles in the Congress.
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