Ten years after the start of the global financial crisis, the time has come for the international body of regulators monitoring financial stability to look forward, including preparing for the next crisis with a review of how it assesses vulnerabilities, its new chairman said Sunday.
Randal Quarles, chairman of the Financial Stability Board (FSB) and vice chairman for supervision of the Federal Reserve Board, told a special meeting of the governors for the Bank for International Settlements in Hong Kong that his focus as chairman of the FSB will be to improve the FSB and prepare it for the next phase of its existence.
“This is an important time for the FSB. We are nearing completion of the post-crisis reform agenda, a major accomplishment,” Quarles said, in his inaugural speech as FSB chairman (a position he was named to for a three-year term by the international organization in November). He said the group will work to enhance its transparency and to expand efforts to reach out to as many stakeholders as possible.
“We will prepare for the next crisis by making sure that our framework to assess vulnerabilities to financial stability is state of the art and remains so going forward,” he said. “And, we will work hard to maintain the important reforms in place, ensure they are working as intended, and, where possible, improve them.”
Quarles told the group that, while reforms adopted in the wake of the financial crisis of 10 years ago have been effective, they do not inoculate the financial system from future crises.
“It means that we have boosted the financial system’s resilience to some of the types of shocks and vulnerabilities that precipitated the crisis,” he said. “To be sure, some of these measures, like higher bank capital and liquidity requirements, after effective against a wide range of shocks. However, we cannot be complacent and assume that we are safe from all shocks. As a result, the FSB has decided to undertake a review of its framework for assessing vulnerabilities to ensure that we are at the cutting edge of financial stability vulnerability assessment.”
The FSB is made up of national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts, according to the group.