Financial Stability Board

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Financial Stability Board

Financial Stability Board (FSB)

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The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system.

Background

The Financial Stability Board was established in April 2009 in response to the 2008 Global Financial Crisis.
It was created by the G20 to strengthen the international financial system and improve oversight of global financial markets.
It was established in the 2009 G20 Pittsburgh Summit as a successor to the Financial Stability Forum.
The Board includes all G20 major economies, FSF members, and the European Commission.

Nature, Headquarter & Membership

Nature

An international body that monitors and makes recommendations about the global financial system.
The FSB is established as a not–for-profit association under Swiss law and is hosted by Bank for International Settlements (BIS).
The FSB’s decisions are not legally binding on its members.

Headquarters

Basel, Switzerland

Membership

The FSB has 71 member institutions, comprising ministries of finance, central banks, and supervisory and regulatory authorities from 25 jurisdictions as well as 13 international organizations and standard-setting bodies, and 6 Regional Consultative Groups reaching out to 65 other jurisdictions around the world
The Board includes all G20 major economies, FSF members, and the European Commission.
India is an active member of the FSB having three seats in its Plenary represented by Secretary (EA), Deputy Governor-RBI and Chairman-SEBI

Organisational Structure and Governance

The organisation structure of the FSB consists of the Plenary, Steering Committee, Standing Committees, Working Groups, Regional Consultative Groups, Chair and the Secretariat.
The Plenary serves as the sole decision-making body.

Mandate of the Financial Stability Board (FSB)

The FSB promotes international financial stability by:
- Coordinating national financial authorities and international standard-setting bodies
- Encouraging coherent implementation of robust policies across sectors and countries
The FSB, working through its members, seeks to strengthen financial systems and increase the stability of international financial markets. The policies developed in the pursuit of this agenda are implemented by jurisdictions and national authorities.
More specifically, the FSB was established to:
- Assess vulnerabilities affecting the global financial system as well as to identify and review, on a timely and ongoing basis within a macroprudential perspective, the regulatory, supervisory and related actions needed to address these vulnerabilities and their outcomes.
- Promote coordination and information exchange among authorities responsible for financial stability.
- Monitor and advise on market developments and their implications for regulatory policy.
- Monitor and advise on best practice in meeting regulatory standards.
- Undertake joint strategic reviews of the international standard-setting bodies and coordinate their respective policy development work to ensure this work is timely, coordinated, focused on priorities and addresses gaps.
- Set guidelines for establishing and supporting supervisory colleges.
- Support contingency planning for cross-border crisis management, particularly with regard to systemically important firms.
- Collaborate with the International Monetary Fund (IMF) to conduct Early Warning Exercises.
- Promote member jurisdictions’ implementation of agreed commitments, standards and policy recommendations, through monitoring of implementation, peer review and disclosure.

The Financial Stability Board (FSB) plays a pivotal role in promoting global financial stability through coordination of financial regulations and systemic risk monitoring. Its work since the 2008 crisis has helped improve banking standards, regulate emerging financial sectors like crypto-assets, and address cross-border financial vulnerabilities. For India, active participation in FSB enhances both credibility and preparedness in the global financial landscape.

FAQs

Q1. What is the Financial Stability Board (FSB)?

The FSB is an international body that monitors and makes recommendations to strengthen the global financial system and prevent systemic risks.

Q2. Is India a member of the FSB?

Yes, India is a member. It is represented by the Ministry of Finance, RBI, and SEBI.

Q3. Where is the headquarters of the FSB?

The FSB is headquartered in Basel, Switzerland, and is hosted by the Bank for International Settlements (BIS).

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