The Financial Stability Board (FSB) Regional Consultative Group for Asia (RCG Asia) met on 16 October in Hong Kong SAR. Members exchanged insights from a workshop on 15 October, co-organised with the International Organisation of Securities Commissions Asia Pacific Regional Committee (IOSCO APRC), on the financial stability implications of crypto-assets, tokenisation and artificial intelligence.
Participants discussed how the new regulatory environment for crypto-assets has led to the creation of more exchanges, fragmenting liquidity across jurisdictions and creating an uneven playing field with entities that reside outside the regulatory perimeter. Increased convergence between decentralised finance and traditional finance necessitates enhanced monitoring and greater supervisory and regulatory cooperation within and across borders. Members supported collaboration between RCG Asia and IOSCO APRC on future issues of significance to financial stability.
The group then discussed global and regional financial market developments. Recent market volatility in the region highlights ongoing concerns over the macroeconomic environment. Members also discussed the role of technology in the financial system, leading to new interconnections and dependencies, as demonstrated by the CrowdStrike outage and operational disruptions in high-value messaging and payments systems in July.
Members acknowledged the relevance of the FSB’s toolkit for third-party risk management, which aims to help financial institutions monitor, identify, and manage risks arising from third-party services. They noted that operational risks are compounded by the increasing number and complexity of financial fraud cases. The group discussed these challenges and explored the scope for better cross-border and cross-agency cooperation.
Reflecting on lessons from the 2023 banking turmoil, members shared information on recent changes to their resolution strategies and tools. They reviewed progress in implementing the FSB Key Attributes for Effective Resolution Regimes for Financial Institutions. Members look forward to the FSB’s upcoming report, which will summarise the work on interest and liquidity risk and on depositor behaviour and the role of technology and social media.
Members received an update on the FSB’s work programme for 2024 and shared their thoughts on areas for consideration as the FSB develops its plans for 2025.
