FSB Lays Out Ambitious 2014 Agenda to Quash Imminent Collapse of Global Regime
At the G-20 ministerial over the weekend, the Financial Stability Board pressed hard for a renewed commitment to harmonized cross-border regulation, a new plea resulting from what it called a lack of “mutual trust” leading unnamed nations to go their own way on key initiatives like cross-border resolution protocols, substitutive compliance, divergent capital standards, and what the FSB called domestic actions that fragment global finance. Much in the FSB’s work plan is aimed at completing outstanding reforms for banks, insurance companies, and shadow banking, with many of the new standards still focused on banks in hopes this reduces overall systemic risk. FedFin understands that behind-the scenes discussions pressured the U.S. in the wake of the FRB’s controversial FBO rule and exterritorial disputes related to derivatives. However, FedFin would note that Janet Yellen, who attended her first G-20 over the weekend, knew well this would occur even as the FRB finalized this controversial standard (see Client Report FBO2). G-20 ministers in their communiqué emphasized the need for financial-institution cooperation in cross-border tax reporting and reiterated their deep unhappiness with the failure by the U.S. to ratify IMF governance changes. This report analyzes the FSB’s work plan, which we see as largely focused on efforts as quickly as possible to craft global resolution protocols, set margin standards for repurchase/securities-financing transactions, and finalize rules limiting bank interactions with “shadow” firms.
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