FSB to step up monitoring of implementation of post-crisis reforms

The Financial Stability Board will turn its attention to monitoring the implementation of post-financial crisis reforms and will, for the first time, publish a report on the implementation of reforms and their effects.

The chairman of the Financial Stability Board, Mark Carney, has written to G20 leaders outlining the FSB's agenda for the year ahead.

It includes a greater focus on peer reviews and a major report on improving the resolvability of global systemically important banks.

Part of the review process will be to highlight any shortcomings or unintended consequences in reforms.

Carney said a particular concern was the slow and uneven implementation of agreed reforms of over-the-counter derivative markets.

The FSB is also aiming to finalise the international standard for loss-absorbing capacity of G-SIBs.

Among the emerging risks the FSB will address is an increase in financial market volatility.

"The disconnect between risk-taking in financial markets and developments in real economies poses the threat of sharp adjustments in financial market process at some point," Carney said.

"There is a growing concern that current prices of some securities are based on optimistic assumptions about the likely liquidity of those assets in the event of a market correction.

"Although liquidity has become scarcer as banks have reduced the scale of their trading books, investors are assuming any future sales can be performed in an environment of continuous liquidity."

Carney said the FSB was also concerned that the level of misconduct in some financial institutions had risen to a level that had the potential to create systemic risks.