The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the
global financial system
The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic actors that together facilitate international flows of financial capital for purposes of investment and trade finan ...
. It was established after the
G20 London summit in April 2009 as a successor to the
Financial Stability Forum
The Financial Stability Forum (FSF) was a group consisting of major national financial authorities such as finance ministries, central bankers, and international financial bodies. It was first convened in April 1999 in Washington. At the 2009 G20 ...
(FSF). The Board includes all
G20 major economies, FSF members, and the
European Commission
The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...
. Hosted and funded by the
Bank for International Settlements, the board is based in
Basel
, french: link=no, Bâlois(e), it, Basilese
, neighboring_municipalities= Allschwil (BL), Hégenheim (FR-68), Binningen (BL), Birsfelden (BL), Bottmingen (BL), Huningue (FR-68), Münchenstein (BL), Muttenz (BL), Reinach (BL), Riehen (BS ...
,
Switzerland, and is established as
a not-for-profit association under Swiss law.
The FSB represented the G20 leaders' first major international institutional innovation.
U.S. Treasury
The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and t ...
Secretary
A secretary, administrative professional, administrative assistant, executive assistant, administrative officer, administrative support specialist, clerk, military assistant, management assistant, office secretary, or personal assistant is a ...
Tim Geithner has described it as "in effect, a fourth pillar" of the architecture of global economic governance. The FSB has been assigned a number of important tasks, working alongside the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
,
World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, and the
World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and ...
.
Unlike most multilateral financial institutions, the FSB lacks a legal form and any formal power, given that its charter is an informal and nonbinding memorandum of understanding for cooperation adopted by its members.
History
Financial Stability Forum
The FSB's predecessor organization, the Financial Stability Forum (FSF), had emerged from a group of
finance ministries,
central bank
A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union,
and oversees their commercial banking system. In contrast to a commercial bank, a central b ...
ers, and international financial bodies, which had been founded in 1999 to promote international financial stability by the finance ministers and central bank governors of
G7 countries.
The FSF facilitated discussion and cooperation on supervision and surveillance of financial institutions, transactions, and events. FSF was managed by a small secretariat housed at the
Bank for International Settlements in
Basel
, french: link=no, Bâlois(e), it, Basilese
, neighboring_municipalities= Allschwil (BL), Hégenheim (FR-68), Binningen (BL), Birsfelden (BL), Bottmingen (BL), Huningue (FR-68), Münchenstein (BL), Muttenz (BL), Reinach (BL), Riehen (BS ...
,
Switzerland.
The FSF membership included about a dozen nations who participate through their central banks, financial ministries and departments, and securities regulators, including: the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
,
Japan,
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
, the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
,
France
France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of overseas regions and territories in the Americas and the Atlantic, Pacific and Indian Oceans. Its metropolitan area ...
,
Italy
Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical ...
,
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
,
Australia, the
Netherlands
)
, anthem = ( en, "William of Nassau")
, image_map =
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Kingdom of the Netherlands
, established_title = Before independence
, established_date = Spanish Netherl ...
and several other industrialized economies as well as several international economic organizations. At the G20 summit on 15 November 2008, it was agreed that the membership of the FSF will be expanded to include emerging economies, such as China. The
2009 G20 London summit
The 2009 G20 London Summit was the second meeting of the G20 heads of government/heads of state, which was held in London on 2 April 2009 at the ExCeL Exhibition Centre to discuss financial markets and the world economy. It followed the first ...
decided to establish a successor to the FSF, the Financial Stability Board (FSB) to include members of the G20 who had not been FSF members.
Founding
The Financial Stability Forum met in
Rome
, established_title = Founded
, established_date = 753 BC
, founder = King Romulus (legendary)
, image_map = Map of comune of Rome (metropolitan city of Capital Rome, region Lazio, Italy).svg
, map_caption ...
on 28–29 March 2008 in connection with the
Bank for International Settlements. Members discussed current challenges in financial markets, and various policy options to address them from this point forward.
At this meeting, the FSF discussed a report to be delivered to
G7 Finance Ministers and Central Bank Governors in April 2008. The report identifies key weaknesses underlying current financial turmoil, and recommends actions to improve market and institutional resilience. The FSF discussed work underway at the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
and
Organisation for Economic Co-operation and Development with regard to
sovereign wealth fund
A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as ...
s. The International Monetary Fund is working closely with sovereign wealth funds to identify a set of voluntary best practice guidelines, and is focusing on the governance, institutional arrangements and transparency of sovereign wealth funds.
On 12 April 2008, the FSF delivered a report to the G7 Finance Ministers detailing its recommendations:
* Strengthen prudential oversight of capital, liquidity, and risk management
* Enhance transparency and valuation
* Change the role and uses of
credit rating
A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government), predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.
...
s
* Strengthen the authorities' responsiveness to risks
* Make robust arrangements for dealing with stress in the financial system
2012 reforms
The High-Level Panel on the Governance of the FSB was an independent initiative coordinated by
Domenico Lombardi of the
Brookings Institution
The Brookings Institution, often stylized as simply Brookings, is an American research group founded in 1916. Located on Think Tank Row in Washington, D.C., the organization conducts research and education in the social sciences, primarily in e ...
and funded by the
Connect U.S. Fund. It assembled a high-level panel of experts, including
Uganda
}), is a landlocked country in East Africa. The country is bordered to the east by Kenya, to the north by South Sudan, to the west by the Democratic Republic of the Congo, to the south-west by Rwanda, and to the south by Tanzania. The sou ...
's former
Finance Minister
A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation.
A finance minister's portfolio has a large variety of names around the world, such as "treasury", ...
and
Central Bank Governor of Uganda
Ezra Suruma, former
Prime Minister
A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister i ...
of
Kyrgyzstan
Kyrgyzstan,, pronounced or the Kyrgyz Republic, is a landlocked country in Central Asia. Kyrgyzstan is bordered by Kazakhstan to the north, Uzbekistan to the west, Tajikistan to the south, and the People's Republic of China to the ea ...
Djoomart Otorbaev, former
Finance Minister
A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation.
A finance minister's portfolio has a large variety of names around the world, such as "treasury", ...
of
Colombia José Antonio Ocampo
José Antonio Ocampo Gaviria (born 20 December 1952) is a Colombian writer, economist and academic who was the professor of professional practice in international and public affairs and director of the Economic and Political Development Concentra ...
, and
Jacques Mistral, a former member of
France
France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of overseas regions and territories in the Americas and the Atlantic, Pacific and Indian Oceans. Its metropolitan area ...
's Council of Economic Analysis.
Lombardi published the panel's final report in September 2011 as a Brookings Issue Paper, concluding that the FSB's governance had not evolved as quickly as its prominence. It made several recommendations:
At the
2011 G20 Cannes summit
The 2011 G20 Cannes Summit was the sixth meeting of the G20 heads of government/heads of state in a series of on-going discussions about financial markets and the world economy.
The G20 forum is the avenue for the G20 economies to discuss, plan ...
, the G20 called for a strengthening of the FSB's capacity resources and governance by establishing the FSB "on an enduring organizational basis".
In its 2012 report to the
G20 Los Cabos summit, the FSB set out concrete steps to strengthen the organization's capacity, resources, and governance as well as establish it on an enduring organizational footing. The G20 endorsed the FSB's restated and amended charter. In January 2013, the FSB became a separate legal entity in the form of an association or "Verein" under Swiss law, when its Articles of Association were adopted by the FSB Plenary.
The FSB is hosted and funded by the Bank for International Settlements under a five-year agreement executed between the two in January 2013. The bank bears the majority of the FSB's operating expenses, and the FSB does not have any assets, liabilities, or revenue.
2016 reforms
In late July 2016, after the world markets had faced a number of crises, including terrorism and the UK's
decision to leave
''Decision to Leave'' () is a 2022 South Korean romantic mystery film produced, co-written and directed by Park Chan-wook. It stars Tang Wei and Park Hae-il.
In April 2022, the film was selected to compete for the Palme d'Or at the 2022 Canne ...
the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
, Carney sent a letter to Finance Ministers attending the G20 Summit and to Central Bank Governors outlining the reforms the FSB had made indicating that the global economy and financial system had "continued to function effectively" and had "weathered" the "spikes in uncertainty and risk aversion", confirming that "this resilience in the face of stress demonstrates the enduring benefits of G20 post-crisis reforms". He emphasized the value of specific reforms that had been implemented by the Financial Stability Board stating that these had "dampened aftershocks from
lobal financial crisesrather than amplifying them". He expressed confidence in the FSB's strategies, stating that "resilience in the face of stress demonstrates the enduring benefits of G20 post-crisis reforms".
The FSB published the pre-G20 summit letter
in light of the "two spikes in uncertainty and risk aversion" weathered by the global economy and financial system as of late July 2016, which outlined its priorities for 2016:
* Promote a coordinated program of reforms to deliver resilient sources of market-based finance, including addressing structural vulnerabilities associated with
asset management
* Develop robust financial market infrastructure, including assessing policies on central counterparty resilience, recovery, and resolvability, and recommending any necessary improvements
* Support effective
macroprudential arrangements by drawing lessons from countries that have applied macroprudential policy frameworks and tools, working in partnership with the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
and
Bank for International Settlements
In addition to the priorities listed above, the FSB also sought to:
* Pursue the full and consistent implementation of post-crisis reforms, while addressing material
unintended consequences
In the social sciences, unintended consequences (sometimes unanticipated consequences or unforeseen consequences) are outcomes of a purposeful action that are not intended or foreseen. The term was popularised in the twentieth century by Ameri ...
* Address new and emerging vulnerabilities in the financial system, including those associated with conduct, correspondent banking and climate change
* Monitor the potentially systemic implications of
financial technology
Fintech, a portmanteau of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, blockchain, cloud computing, and big data are r ...
innovations
Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed entit ...
, and the systemic risks arising from operational disruptions
In November 2016, the FSB and the board of the Bank for International Settlements agreed to a further five-year extension of the agreement from January 2018 to 2023.
Membership and leadership
The FSB has 71 member institutions, comprising ministries of finance, central banks, and supervisory and regulatory authorities from 25 jurisdictions as well as 13 international organizations and
standard-setting bodies
A standards organization, standards body, standards developing organization (SDO), or standards setting organization (SSO) is an organization whose primary function is developing, coordinating, promulgating, revising, amending, reissuing, interpr ...
, and 6 Regional Consultative Groups reaching out to 65 other jurisdictions around the world.
Members include:
;Organizations:
*
Bank for International Settlements
*
ECB Banking Supervision
*
European Central Bank
The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important centr ...
*
European Commission
The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...
*
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
*
Organisation for Economic Co-operation and Development
*
The World Bank
The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development G ...
;Standard-setting bodies:
*
Basel Committee on Banking Supervision
*
Committee on Payments and Market Infrastructures
*
Committee on the Global Financial System
*
International Association of Insurance Supervisors
The International Association of Insurance Supervisors (IAIS) is a voluntary membership organization of insurance supervisors from over 190 jurisdictions, constituting 97% of the world's insurance premiums. It is the international standards-sett ...
*
International Accounting Standards Board
*
International Organization of Securities Commissions
Chairs
As a 2011
Brookings Institution
The Brookings Institution, often stylized as simply Brookings, is an American research group founded in 1916. Located on Think Tank Row in Washington, D.C., the organization conducts research and education in the social sciences, primarily in e ...
report noted, there are no set rules for how the FSB
chair is selected, reflecting the FSB's newness as well as the "central banking culture of discretion and informality that permeates the institution".
The list of the FSB's chairs from its inception is:
*
Mario Draghi
Mario Draghi (; born 3 September 1947) is an Italian economist, academic, banker and civil servant who served as prime minister of Italy from February 2021 to October 2022. Prior to his appointment as prime minister, he served as President of ...
(2009–2011),
President
President most commonly refers to:
*President (corporate title)
* President (education), a leader of a college or university
* President (government title)
President may also refer to:
Automobiles
* Nissan President, a 1966–2010 Japanese ...
of the
European Central Bank
The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important centr ...
and former
Governor
A governor is an administrative leader and head of a polity or political region, ranking under the head of state and in some cases, such as governors-general, as the head of state's official representative. Depending on the type of political ...
of the
Bank of Italy
The Bank of Italy ( Italian: ''Banca d'Italia'', informally referred to as ''Bankitalia''), (), is the central bank of Italy and part of the European System of Central Banks. It is located in Palazzo Koch, via Nazionale, Rome. The bank's cur ...
*
Mark Carney
Mark Joseph Carney (born March 16, 1965) is a Canadian economist and banker who served as the governor of the Bank of Canada from 2008 to 2013 and the governor of the Bank of England from 2013 to 2020. Since October 2020, he is vice chairman an ...
(2011–2018),
Governor
A governor is an administrative leader and head of a polity or political region, ranking under the head of state and in some cases, such as governors-general, as the head of state's official representative. Depending on the type of political ...
of the
Bank of England and former
Governor
A governor is an administrative leader and head of a polity or political region, ranking under the head of state and in some cases, such as governors-general, as the head of state's official representative. Depending on the type of political ...
of the
Bank of Canada
*
Randal Quarles (2018–2021),
Vice Chair for Supervision of the
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
*
Klaas Knot (2021–present), President of
De Nederlandsche Bank
References
{{Coord, 47.5481, N, 7.5918, E, source:wikidata, display=title
Central banks
2009 establishments in Switzerland
Organizations established in 2009
Financial regulation
International finance institutions
Organisations based in Basel
Systemic risk
Mario Draghi
fr:Conseil de stabilité financière