Tuesday, August 23, 2011

FSB - FSB releases consultation documents on measures to address systemically important financial institutions

FSB releases consultation documents on measures to address systemically important financial institutions

Ref no: 35/2011
19 July 2011

"The Financial Stability Board (FSB) and the Basel Committee on Banking Supervision are today launching a public consultation on two documents that set out proposed measures to address the systemic and moral hazard risks posed by systemically important financial institutions (SIFIs). The measures implement the framework contained in the FSB’s recommendations endorsed by the G20 Leaders in November 2010.

The consultative document on Effective Resolution of Systemically Important Financial Institutions sets out a comprehensive package of proposed policy measures to improve the capacity of authorities to resolve failing SIFIs without systemic disruption and without exposing the taxpayer to the risk of loss. The proposed measures comprise four key building blocks:

  • Strengthened national resolution regimes that give a designated resolution authority a broad range of powers and tools, including statutory bail-in, to resolve a financial institution that is no longer viable.
  • Cross-border cooperation arrangements in the form of institution-specific cooperation agreements, underpinned by national law, that will enable resolution authorities to act collectively to resolve cross-border firms in a more orderly, less costly, way.
  • Improved resolution planning by firms and authorities based on ex antere solvability assessments that should inform the preparation of Recovery and Resolution Plans.
  • Measures to remove obstacles to resolution arising from complex firm structures and business practices, fragmented information systems, intra-group transactions, reliance on service providers and the provision of global payment services.
To help inform its final resolution related recommendations, the FSB is also releasing two discussion notes for comments. A note on Creditor hierarchy, depositor preference and depositor protection in resolution seeks views on the impact on effective resolution of differences in the ranking of creditors’ claims, in particular in the treatment of deposit claims. Another note on Conditions for imposing temporary stays discusses the possible conditions under which a temporary suspension of contractual early termination rights should apply to support the implementation of certain resolution tools..."

Source: http://www.financialstabilityboard.org/press/pr_110719.pdf

[Mrt: Obviously the risks, the leverage, systemic vulnerabilities are known.]


[Mrt: The file leads to another]

Reducing the moral hazard posed by systemically important financial institutions FSB Recommendations and Time Lines20 October 2010

Source: http://www.financialstabilityboard.org/publications/r_101111a.pdf

[Mrt: ...and so here we have a straight timeline :o)]


[Mrt: ...and here we have the official announcement at bis]

Assessment methodology and the additional loss absorbency requirement for global systemically important banks - consultative document issued by the Basel Committee
19 July 2011

Source: http://www.bis.org/press/p110719.htm

[Mrt: See the difference in dates between II. and III.]

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