Reducing moral hazard in the global banking business has been one of the central goals of policymakers in recent years. Once again, they are taking stock of how well they’ve done.
The Financial Stability Board (FSB) is launching its second review of bank resolution regimes around the world to examine the powers and tools that various countries have developed in the years since the financial crisis to deal with failing financial institutions. This latest review aims to assess the range and nature of resolution powers that are available for the banking sector, and to evaluate requirements for recovery and resolution planning that could be systemically significant in the event of a bank failure.
A survey to collect information from national regulators has been distributed, and the responses it receives will be analyzed and discussed by the FSB later this year. A report on the review is to be published in early 2016.
As part of the review, the FSB is also seeking feedback from financial institutions, industry and consumer associations, and others, on the implementation of reforms to resolution regimes. The group indicates that the this could include comments on: the institutional arrangements for resolution authorities and the role of the courts in the resolution process; the scope and design of guidance by the authorities on entering resolution and for the exercise of bank resolution powers; and, factors that may affect the way that resolution powers may be exercised in different regimes.
Those comments are sought by May 8.