Tuesday, 16 July 2024
FSB Americas group discusses sovereign-bank risks, crypto issues
The Financial Stability Board (FSB) Regional Consultative Group (RCG) for the Americas discusses risks associated with the sovereign-bank nexus and crypto-asset arrangements.
FSB Americas group met on 17 and 18 June in the British Virgin Islands. On the first day, members participated in a roundtable discussion with representatives from the International Association of Deposit Insurers to discuss the role of deposit insurance and resolution frameworks in maintaining depositor confidence. Members look forward to the FSB’s resolution work following up on lessons learned from the March 2023 banking turmoil.
Discussions on the second day began with an appraisal of recent developments and macrofinancial risks and vulnerabilities, including tight financing conditions against the backdrop of high public and private sector debt levels. Members exchanged views on links between the sovereign and banking sectors and discussed whether such interconnections could pose risks to financial stability.
Members also received an update on the FSB’s work programme for 2024 and discussed ways they could contribute to the FSB’s work programme to bring in additional perspectives from the region.
One initiative the RCG Americas has taken forward relates to the FSB’s global framework for crypto-asset activities. In May 2023, members agreed to review developments and the current state of regulations within the region. Members discussed this stocktake and ways to ensure effective, flexible, and coordinated implementation of the comprehensive policy response for crypto-assets and global stablecoin arrangements. Given the particularly acute risk of regulatory arbitrage in the crypto space, broad global implementation is crucial.
Members shared their experiences of the oversight and management of financial institutions’ risks from outsourcing of critical services to third parties considering the FSB’s toolkit for financial authorities and financial institutions for enhancing their third-party risk management and oversight, which was published in December 2023.
Re-disseminated by The Asian Banker
