The Financial Stability Board (FSB) on Thursday issued two final guidance papers that aim to help the regulators and firms put an end to “too big to fail” policies in the financial industry.
In particular, the FSB published one paper that seeks to address the risk of systemically important banks having insufficient liquidity to maintain critical operations during a resolution by ensuring that banks would have access to temporary funding without a taxpayer bailout.
A second paper sets out arrangements to support the continuity of services, such as information technology infrastructure and software-related services, that are necessary to maintain a firm’s critical functions while a bank is being wound up.
Additionally, the FSB also published its latest progress report for the G20 which reviews what has been achieved so far, and sets out further actions to fully implement the principles to ensure that all global systemically important financial institutions (G-SIFIs) are resolvable.
“While good progress has been made, there is still some work necessary to put in place effective policies and regimes, in particular for central counterparties (CCPs) and systemic insurers,” said Elke König, chairwoman of the FSB resolution steering group and chair of the European Single Resolution Board. “The steps outlined in our report to the G20, once implemented, will enable us to complete our task so that firms can be resolved at no cost to taxpayers.”
Over the next couple of years, the FSB says that it intends to develop further guidance on central counterparty (CCP) resolution; finalize the remaining elements of the Total Loss-absorbing Capacity (TLAC) standard; and, to develop guidance on ways to maintain access to financial market infrastructures during a resolution; among other things.