The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. It was established after the

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 ...

in April 2009 as a successor to the Financial Stability Forum (FSF). The Board includes all

G20 major economies The G20 or Group of Twenty is an Intergovernmental organization, intergovernmental forum comprising 19 countries and the European Union (EU). It works to address major issues related to the World economy, global economy, such as international f ...

, 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 Bank for International Settlements (BIS) is an international financial institution owned by central banks that "fosters international monetary and financial cooperation and serves as a bank for central banks". The BIS carries out its work th ...

, 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

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 gl ...

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 centra ...

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

, 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 U.S. state, states, a Washington, D.C., federal district, five ma ...

, Japan,

Germany Germany, officially the Federal Republic of Germany (FRG),, is a country in Central Europe. It is the most populous member state of the European Union. Germany lies between the Baltic and North Sea to the north and the Alps to the sou ...

, 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 ar ...

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 tota ...

, 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

. 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

and

Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organization, intergovernmental organisation with 38 member countries ...

with regard to sovereign wealth funds. 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 defaultin ...

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 Domenico Lombardi is a former director of the Global Economy program at the Centre for International Governance Innovation (CIGI), a non-partisan global governance think tank in Waterloo, Ontario, Canada. He is also chair of the Oxford Institute fo ...

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 south ...

'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 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 ba ...

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 is ...

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

of Colombia José Antonio Ocampo, and

Jacques Mistral Jacques Mistral (born September 22, 1947) is a French economist and professor. He is a member of the Council of Economic Analysis (''Conseil d'analyse économique'') in France, a member of the Cercle des économistes, and as of October 2009, a mem ...

, a former member of

'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, pla ...

, 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 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 ...

, 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 Asset management is a systematic approach to the governance and realization of value from the things that a group or entity is responsible for, over their whole life cycles. It may apply both to tangible assets (physical objects such as buildings ...

* 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

and

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 innovations, 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: *

ECB Banking Supervision European Banking Supervision, also known as the Single Supervisory Mechanism (SSM), is the policy framework for the prudential supervision of banks in the euro area. It is centered on the European Central Bank (ECB), whose supervisory arm is ...

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 centra ...

Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...

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 Gr ...

;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 *

International Accounting Standards Board The International Accounting Standards Board (IASB) is the independent accounting standard-setting body of the IFRS Foundation. The IASB was founded on April 1, 2001, as the successor to the International Accounting Standards Committee (IASC). ...

International Organization of Securities Commissions The International Organization of Securities Commissions (IOSCO) is an association of organizations that regulate the world's securities and futures markets. Members are typically primary securities and/or futures regulators in a national jurisdi ...

Chairs

As a 2011

report noted, there are no set rules for how the FSB

chair A chair is a type of seat, typically designed for one person and consisting of one or more legs, a flat or slightly angled seat and a back-rest. They may be made of wood, metal, or synthetic materials, and may be padded or upholstered in vari ...

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 of the

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 * Mark Carney (2011–2018),

of the Bank of England and former

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