In 15 years, the Financial Stability Board has become the “guardian” of global financial stability
Bulletin No 254, article 2. Since its creation in April 2009, the Financial Stability Board (FSB) has undeniably contributed to making the global financial system more resilient. The institution’s credibility has grown over the years, as a result in particular to the operating methods that have enabled it to carry out rigorous and innovative work, and to establish “rules of the game” that foster a harmonised implementation across sectors and jurisdictions. In the current context of unprecedented challenges that know no borders, such as the changes linked to the digitalisation of finance and the financial risks associated with climate change, it is even more important for the FSB to maintain a strong commitment to risk monitoring and prevention, particularly within the G20 framework.
1 The Financial Stability Board: a new player established in the wake of the 2007-08 global financial crisis
The Financial Stability Forum, predecessor of the Financial Stability Board
The Financial Stability Forum (FSF) was created in February 1999 at the initiative of the G7 countries in the wake of the 1997 Asian financial crisis and the difficulties encountered by the US hedge fund Long-Term Capital Management. The FSF brought together monetary and financial authorities, mainly central banks from G7 countries and a few other jurisdictions (including Hong Kong, Singapore and Switzerland), as well as various international organisations.
The FSF’s mission was to promote financial stability by developing international cooperation in the areas of the supervision and the oversight of the financial system. Its work focused on detecting and analysing both cyclical and structural vulnerabilities.
The nature and scale of the 2007-08 financial crisis prompted the creation of a full-fledged Financial Stability Board
The global nature of the 2007-08 financial crisis, and in particular its rapid spread to various markets and emerging countries, highlighted the need for more representative international institutions capable of i) alerting governments and regulators to vulnerabilities and practices that could potentially threaten the equilibrium of the global financial system, and ii) formulating proposals to remedy them.
It then became clear that the FSF was no longer an appropriate structure, mainly because it was not geographically representative. At the G20 summit in London in April 2009, the decision was taken to create the Financial Stability Board (FSB). A few months later, at the G20 Summit in Pittsburgh in September 2009, the Heads of State and Government approved the original Charter of the FSB, which defines its objectives, mandate and organisational structure.
The Financial Stability Board: composition and interaction with non-member authorities
The FSB is made up of representatives of national financial authorities – central banks, finance ministries and supervisory authorities (markets, banks, insurers, depending on the country) – international financial institutions (including the International Monetary Fund, the World Bank and the Bank for International Settlements) and international standard-setting bodies (including the Basel Committee on Banking Supervision, the Committee on Payments and Market Infrastructures and the International Organisation of Securities Commissions). As regards the national authorities, the member jurisdictions are those of the G20, as well as several jurisdictions invited on an ad hoc basis. France is represented by the Banque de France, the French Treasury and the Autorité des marches financiers. …
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Updated on the 4th of December 2024