The Financial Stability Board (FSB), Conclusions...

Financial Stability Board (FSB)

The Financial Stability Board was created on the basis of the Financial Stability Forum, which has existed since 1999. The FSB is an international organization created by the countries of the "Big Twenty" at the London summit in April 2009. The main goal of the organization is to identify weaknesses in the field of global financial stability, to develop and apply regulatory and supervisory policies in this area. The Council includes representatives of national financial management bodies (Central banks, supervisory authorities, Ministries of Finance), international financial institutions, commissions of experts of the Central Banks. The transformed Council included authorized representatives of financial authorities from 24 sovereign jurisdictions (with reservations about the quasi-sovereignty of Hong Kong). The members of the Council represent, indeed, practically all the leading economies of the world. They account for more than 90% of global GDP and more than 80% of world trade. Consequently, if a decision is made, it will apply to virtually the entire global economy as a whole.

In addition, Global Multilateral Financial Institutions and international organizations that develop standards, regulation and supervision in the financial sphere have become members of the Council. Among them are such authoritative institutions as the European Central Bank, the European Commission, the Bank for International Settlements, the International Monetary Fund, the Organization for Economic Cooperation and Development, the World Bank, the Basel Committee on Banking Supervision, the Committee on Payment and Settlement Systems, the Committee on the Global Financial System, Council on International Financial Reporting Standards, International Association of Insurance Supervisors, International Organization of Securities Commissions.

Key functions of the Financial Stability Board (FSB):

• monitoring the economic situation in general and in financial markets in particular;

• comparison of the situation in the economy with the existing regulatory measures and preparation of recommendations for amending the existing legislation;

• carrying out activities on the line of multivariate planning for the purpose of transboundary crisis management, especially with respect to backbone companies;

• Interaction with the IMF to identify crisis phenomena in the early phases of their inception.

In recent years, the priority areas of the SPS were the following:

• regulation of the activities of systemically important financial institutions (SZFI), including the improvement of capital requirements and insolvency regimes;

• regulation of shadow banking activities

• Reforming the OTC derivatives market;

• Improving the practice of financial incentives for employees of financial institutions;

• decrease in dependence on ratings of rating agencies;

• Creation of a single global code for legal entities;

• Monitoring the implementation of recommendations and the implementation of standards.

Within the framework of the Council's work, a system of international financial standards (Compendium of Standards ) was developed. which creates a vertically integrated international structure within which the development and adoption of decisions aimed at ensuring global financial stability through the implementation of common sets of measures and approaches in the field of financial supervision and regulation, the convergence of regulations.

The priority is the 12 standards, which are determined by the recognized minimum, they must be followed by all member countries.

1. Macroeconomic policy and data transparency:

1) transparency of monetary and financial policies;

2) transparency of fiscal policy; dissemination of data.

2. Institutional and market infrastructure:

3) bankruptcy procedure;

4) corporate governance;

5) financial statements;

6) audit;

7) payments and settlements;

8) market integrity.

3. Financial Regulation and Supervision:

9) banking supervision;

10) regulation of the securities market;

11) Supervision of the insurance market.

The Financial Stability Board is actively working to resolve the "moral hazard" problem. " systemically important financial institutions (the problem of too-big-to-fail.) According to the definition of the joint report of international organizations, systemically significant financial institutions are financial institutions characterized by a significant volume and complexity of operations, systemic interconnection, complexity of replaceability. Deterioration of financial position or disruption of their activities can cause significant damage to the financial system and the economy.

This problem has become especially urgent but the time of the crisis of 2008-2009, when bankruptcy violated the stability of the global financial system. One of the reasons was the underestimation by regulators of the problem of "too important financial institution to go bankrupt" (too big to fail) in the period before the financial crisis. This problem is caused by the danger of unfair behavior of systemically important financial institutions (moral), who took an unreasonably high level of risks, relying on indirect/direct state support (which was reflected, in the end, in the reduced cost of their borrowing) with an adequate risk management system.

Practice questions

The Financial Stability Board (i) (the Financial Stability Board, FSB) in 2013 included 9 insurers in the list of financial groups representing systemic risks for the global economy, as follows from the FSB report. This list includes Allianz SE, AIG, Assicurazioni Generali, Aviva, AX A, MetLife, Ping An Insurance (Group) Company of China, Prudential Financial and Prudential . What specific consequences this decision will entail for these companies will be determined by the regulators, so it's too early to give them an accurate estimate, avenged Allianz SE in your message. The main objectives of the work are reducing the probability and impact of bankruptcies of these institutions on the financial system, improving the management capabilities of firms in crisis, and reducing the risk of transferring negative impacts between financial institutions through the development of financial infrastructure and markets.

The Council works in various areas of regulation and supervision of insurance activities. Select the main:

• the formation of adequate capital adequacy and liquidity standards;

• changing practices in the field of compensation payments;

• Improving the market for derivative financial instruments;

• solving the problem of systemically important financial institutions;

• Stimulating commitment to international standards

• Improving financial supervision and regulation;

• Improvement of financial reporting standards;

• Development of tools for macroprudential regulation;

• work with issues in the field of hedge fund activities;

• Improvement of securitization.

The Financial Stability Board developed financial standards that created a vertical international structure within which decisions are taken but ensuring global financial stability through the implementation of common sets of measures and approaches in the field of financial supervision and regulation, convergence of regulations. >

Conclusions

1. The mechanism of state regulation of insurance, which developed countries have developed and developed for many years and as much as possible adapted to the peculiarities of the national insurance market. An alternative to regionally-oriented regulation can be the creation of a international system of institutions that control the financial activities of private companies.

2. The most likely candidates for the role of the center of such an organization are the International Association of Insurance Supervisors ("i International Association of Insurance Supervisors - IAIS)," Group of Twenty " ( Group of Twenty - G-20), the Financial Stability Board ( Financial Stability Board - FSB).

3. The International Association of Insurance Supervisors (I AIS) has the greatest impact on the insurance market.

4. From a political point of view, the most important source of current international regulatory initiatives is currently the G-20 or G-20. The G-20 member countries represent about 2/3 of the world's population and about 85% of the global national product.

5. Big Twenty has potential problems from the point of view of further development of this format of international cooperation in the development of uniform regulatory standards at the supranational level.

6. The main objective of the Financial Stability Board (FSB) is to identify weaknesses in global financial stability, to develop and apply regulatory and supervisory policies in this area.

7. Prudential regulation is a system for controlling the compliance of insurers with legislation, regulating financial sustainability, developing and monitoring compliance with accounting and reporting requirements, and the like.

8. Integrated regulation arose due to the merger of the insurance business and activities in other financial markets within the framework of unified financial groups, the combination of insurance capital with banking, and the provision of integrated financial services.

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