A video of this event is available here

Jo Marie Griesgraber

FSB rights rules for the planet and makes the IMF look open, transparent and accountable

Matthew Martin, DFI

• LICs demanding more representation on FSB, because it will decide on food speculation, tax havens etc
• What is the FSB
• – established post-crisis by G20 to coordinate on financial regulation
• sets standards
• G20+ important financial centres – some countries have 3 seats. No LIC members
• Structure
• Plenary of all members twice a year
• many committees and working groups
• Reports to G20, most work from G20 mandates, but some comes from elsewhere
• No sign of engagement with UN despite supposed UN mandate to bring in developing country groups
• Does not report or engage with G20 Development Working Group
• How does it operate
• Essentially run by the chair and key people in secretariat. Working groups very important. Determined by G20, but often FSb asks the G20 to ask FSB to do things.
• Lack of formal procedures means chair has a lot of power
• Overlap and lack of clarity with other institutions – IMF, BIS
• IMF and WB have strong role in helping countries implement regulations
• Key FSB subsidiaries / related organisations
• IASB, IOSCO, BIS, BCSB, IAIS, IADI
• Common features – high presence of private sector; no openness to civil society or the media; little or no presence of poorer countries
• Why should we care?
• Issue of principle – it’s in the stone age when it comes to accountability and transparency
• Huge conflicts of interest
• virtually no access for LICs
• Key issues: IASB accounting standards are key for tax evasion, capital flight etc
• IOSCO – derivatives and commodity trades etc
• BCBS – banking regulation
• Conclusion
• Donelly – FSB is ‘mostly harmless- G8 doesn’t feel constrained by it.
• Private sector doesn’t feel constrained
• But crucial to development issues
• need for a network to open up the FSB

Amar Bhattacharya

• – Basic structure set up in 1999 in aftermath of Asian crisis
• – It’s a network of networks – most of the bodies are official regulatory bodies (BIS, IOSCO, IAIS, CTSS) The only one that is private sector dominated in IASB
• Various governance arrangements – some more democratic than others
• – Must therefore look at the underlying governance structures of the bodies that make it up
• Move from FSF to FSB was positive – FSF was accountable to noone; FSB is accountable to G20 – better but not good enough. Tasked by G20 – more political structure.
• There is an active discussion on governance right now
• What does the FSB do?
• before crisis focus was on underlying weaknesses in emerging market financial systems.
• Has been fundamental change since crisis – good change. Seriousness in G20 to tackle underlying weaknesses in financial system.
• Active discussion at FSB has been an important part of shaping both global and national reform in US, EU and UK
• Focus today
• – last year: reaching agreement on Basle 3 – banking regulation
• – Systemically important financial institutions – work ongoing. Debate: should SIFIs have to have additional capital? A tax on them? Resolution mechanisms well spelled out? Special arrangements for supervision?
• – Shadow banking – how to define it, who takes the risk, supervision etc
• – Derivatives market – pushing to over the counter and having better central party mechanisms
• – Macroprudential regulation – falls between FSB and IMF
• – Convergence on strengthened financial standards – governance arrangements; ensuring it leads to better financial management. Mark to market – tends to be procyclical
• – Peer reviews of FSB countries
• – Compensation – Europeans have been much more forceful than the US on tackling this.
• 2 Fundamental problems for FSB
• – Openness
• – Inclusion – to become what it aspires to become, it has to be a universal organisation
• Missed the final presentations