The Financial Stability Board (FSB) Regional Consultative Group for Europe met on 10 November in Lisbon to discuss global and regional economic and financial market developments, including recent work to address vulnerabilities in non-bank financial intermediation and to promote consistent and effective regulation of crypto-assets and markets as well as stablecoin arrangements. Members also received an update on planned FSB work for 2023, including proposed deliverables to the Indian G20 Presidency. Members discussed the increasingly challenging outlook for financial stability globally and in the region arising from volatile commodity prices, high inflationary pressures and vulnerabilities in the non-bank financial system amidst heightened geopolitical tensions and tightening global financial conditions. Members also discussed challenges arising from climate change related financial exposures, cyber threats and structural changes due to digital innovation.
Recent developments underscore the importance of enhancing the resilience of non-bank financial intermediation. The group discussed FSB analysis and work priorities in this area and agreed with the need to take further steps to address structural liquidity mismatch in open-ended funds, including by promoting greater clarity and specificity around redemption terms and enhancing liquidity management tools, and to close data gaps.
The group exchanged views on jurisdictions’ approaches to the regulation, supervision and oversight of crypto-asset activities and markets and stablecoin arrangements. Members agreed that the FSB’s recently published consultative reports1 are a major step towards establishing a robust international framework to identify, monitor and address financial stability risks from crypto-asset activities. They stressed that further work was needed to promote the effective implementation of the FSB Recommendations once finalised, and that, in light of recent developments, decentralised finance, trading platforms and so-called crypto conglomerates and exchanges that vertically integrate multiple functions deserve urgent regulatory attention. The meeting was preceded by a seminar that explored the growing interlinkages between crypto-asset markets and the traditional financial system.
Source: FSB
