Regulatory Outlook | 07.14.21

Financial Stability Board Finds that Non-Banks’ Resilience Needs Strengthening

by: Mayra Rodriguez Valladares

The Financial Stability Board (FSB) published a report Tuesday concluding that “the March 2020 market turmoil has underscored the need to strengthen resilience in the non-bank financial intermediation (NBFI) sector." Problems during the spring of 2020 included “significant outflows from non-government money market funds and certain types of open-ended funds; redistribution of liquidity from margin calls; the willingness and capacity of dealers to intermediate in core funding markets; and the drivers of dislocations in key government bond markets, including the role of leverage in amplifying the stress.” The FSB announced that it has developed a “comprehensive work program to enhance the resilience of the NBFI sector. The FSB's policy work includes enhancing money market funds' resilience and analysis of vulnerabilities in open-ended funds. Next steps to strengthen the non-banking sector will be published in an FSB report to the G-20 in October.

Read the full article on Forbes.