Financial Stability Board Publishes 2019 Resolution Report11/14/2019The Financial Stability Board has published its 2019 Resolution Report, providing updates on its implementation of policy measures to enhance the resolvability of systemically important financial institutions. Key areas of focus are:
- Central counterparties: the FSB is developing guidance on financial resources to support CCP resolution and the treatment of CCP equity in resolution, which will be subject to further public consultation in the first half of 2020. In line with the FSB’s “Guidance on CCP Resolution and Resolution Planning”, crisis management groups and cooperation agreements are being developed for the 13 CCPs that have been identified as systemically important in more than one jurisdiction. The FSB views the completion of these activities as vital in supporting effective resolution planning.
- Bank resolution: Most home and key host jurisdictions have implemented the FSB’s “Key Attributes of Effective Resolution Regimes for Financial Institutions”, although in certain jurisdictions (including China, India and Russia) implementation is incomplete. All G-SIBs now meet the FSB’s 2019 external TLAC standards, but the FSB’s July 2019 review of the TLAC standard found that further efforts are needed to establish appropriate internal distribution of TLAC resources. The FSB intends to implement the actions set out in its July 2019 review to improve internal distribution of TLAC, including a stock-take of the practices authorities and crisis management groups employ to comply with internal TLAC requirements and an analysis of how pre-positioned TLAC resources are managed. The FSB aims to publish a practices paper on bail-in execution, with a focus on cross-border issues, to assist market participants with the technical issues of executing a bail-in transaction in accordance with the FSB’s “Principles on Bail-In Execution”. It has also found that further work is required in respect of firms’ capabilities for monitoring liquidity and planning for liquidity needs in resolution. The FSB has also begun to increase its focus on resolution planning for domestic systemically important banks, state-owned banks and cooperatives. So far it has engaged in initial discussions about resolution approaches involving tools other than bail-in and resolving banks with different legal and ownership structures, but it intends to hold a workshop in the first half of 2020 to discuss resolution planning for state-owned banks and cooperatives.
- Insurance resolution: The Netherlands and Singapore introduced or strengthened their resolution regimes for insurers in the past year, and a number of jurisdictions have identified systemically important insurers for the purposes of recovery and resolution planning. The FSB continues to work on the Key Attributes Assessment Methodology for the Insurance Sector, and plans to publish a final version in 2020.
Going forward, the FSB Resolution Steering Group intends to continue to provide a forum for discussions around how to avoid risks of unnecessary fragmentation and resolution planning for domestic systemically important banks, state-owned banks and cooperatives. It also aims to facilitate cross-border cooperation for orderly resolution of banks.
View the FSB's 2019 Resolution Report.
View details of the FSB's July 2019 review of the TLAC standard.
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