In this report, FedFin analyzes the overall agenda for 2015 set by the Financial Stability Board in its report before the weekend’s G-20 summit. Based on FSB head Mark Carney’s conclusion that the post-crisis bank reforms are largely complete, the FSB is turning to shadow banking, and we will assess the prospects for strategic change here in a forthcoming separate report. However, even though Mr. Carney says the banking rewrite is largely complete, the plans he announced include what we would call the kick-off to work on a new Basel IV, substantive changes to key aspects of the Basel II and III frameworks (see the 11/12 daily alert), and several additional bank-centric initiatives. The FSB report also details work to date on designating G-SIBs and G-SIIIs, as well as setting surcharge-capital requirements for them. Work to designate non-bank/non-insurance SIFIs will go through another round for finance companies and broker-dealers and is on hold for asset managers (giving them a big break in their campaign against SIFI designation in the U.S.). The FSB report also highlights continued challenges moving toward central clearing, with CCP recovery and resolution now handed over to monitoring following completion of several global reports in this area. Reflecting the growing focus (especially by the FRB) on macroprudential standards, the FSB lays out a new role for itself here, exploring a “comply or explain” approach that would give it far more influence on national policy were regulators to agree or be allowed to defer to the FSB in this critical area.
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