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Monday, April 23, 2012

Defining Framework for Domestic Systemically Important Banks

At the G20 April Finance meeting the Financial Stability Board (FSB), with the Basel Committee on Banking Supervision (BCBS), delivered a requested report to the G20 Leaders on methods to extend the global systemically important financial institutions (G-SIFI) framework to domestically important banks.

The framework being considered for domestic systemically important banks (D-SIBs) will assess the impact of the failure associated with the local presence of a bank in a given jurisdiction, whether a national or an internationally active bank.

The BCBS and FSB have studied a minimum framework for D-SIBs covering both the methodology for assessing the D-SIBs and the policy tools that national authorities may apply to contain the systemic risks they pose. The framework is based on assessment by local authorities, who would be best place to identify such risks.

The BCBS and FSB will conduct further research regarding a minimum framework for D-SIBs and will submit the work to the G20 Ministers and Governors Meeting in November.

Read more.

In addition the Chairman of the FSB to the G20 wrote a letter to the G20 Finance Ministers and Central Bank Governors regarding progress being made in priority areas previously identified by the G20 Leaders. These include: building resilient financial institutions; ending “too big to fail”; strengthening the oversight and regulation of shadow banking activities; and completing OTC derivatives and other reforms to create continuous core markets.

Read the letter.

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