Financial Stability Forum
The FSB's predecessor organization, the Financial Stability Forum (FSF), had emerged from a group of finance ministries, central bankers, and international financial bodies, which had been founded in 1999 to promote international financial stability by the finance ministers and central bank governors of G7 countries.[3] The FSF facilitated discussion and cooperation on supervision and surveillance of financial institutions, transactions, and events. FSF was managed by a small secretariat housed at the Bank for International Settlements in Basel, Switzerland.[4]
The FSF membership included about a dozen nations who participate through their central banks, financial ministries and departments, and securities regulators, including: the United States, Japan, Germany, the United Kingdom, France, Italy, Canada, Australia, the Netherlands and several other industrialized economies as well as several international economic organizations.[5] At the G20 summit on 15 November 2008, it was agreed that the membership of the FSF will be expanded to include emerging economies, such as China. The 2009 G20 London summit decided to establish a successor to the FSF, the Financial Stability Board (FSB) to include members of the G20 who had not been FSF members.[6]
Founding
The Financial Stability Forum met in Rome on 28–29 March 2008 in connection with the Bank for International Settlements. Members discussed current challenges in financial markets, and various policy options to address them from this point forward.[7] At this meeting, the FSF discussed a report to be delivered to G7 Finance Ministers and Central Bank Governors in April 2008. The report identifies key weaknesses underlying current financial turmoil, and recommends actions to improve market and institutional resilience. The FSF discussed work underway at the International Monetary Fund and Organisation for Economic Co-operation and Development with regard to sovereign wealth funds. The International Monetary Fund is working closely with sovereign wealth funds to identify a set of voluntary best practice guidelines, and is focusing on the governance, institutional arrangements and transparency of sovereign wealth funds.[7] On 12 April 2008, the FSF delivered a report to the G7 Finance Ministers detailing its recommendations:[8][9]
The High-Level Panel on the Governance of the FSB was an independent initiative coordinated by Domenico Lombardi of the Brookings Institution and funded by the Connect U.S. Fund. It assembled a high-level panel of experts, including Uganda's former Finance Minister and Central Bank Governor of Uganda Ezra Suruma, former Prime Minister of Kyrgyzstan Djoomart Otorbaev, former Finance Minister of Colombia José Antonio Ocampo, and Jacques Mistral, a former member of France's Council of Economic Analysis.[10] Lombardi published the panel's final report in September 2011 as a Brookings Issue Paper, concluding that the FSB's governance had not evolved as quickly as its prominence. It made several recommendations:[11]
At the 2011 G20 Cannes summit, the G20 called for a strengthening of the FSB's capacity resources and governance by establishing the FSB "on an enduring organizational basis".[12] In its 2012 report to the
In late July 2016, after the world markets had faced a number of crises, including terrorism and the UK's decision to leave the European Union, Carney sent a letter to Finance Ministers attending the G20 Summit and to Central Bank Governors outlining the reforms the FSB had made[15] indicating that the global economy and financial system had "continued to function effectively" and had "weathered" the "spikes in uncertainty and risk aversion", confirming that "this resilience in the face of stress demonstrates the enduring benefits of G20 post-crisis reforms". He emphasized the value of specific reforms that had been implemented by the Financial Stability Board stating that these had "dampened aftershocks from [global financial crises] rather than amplifying them". He expressed confidence in the FSB's strategies, stating that "resilience in the face of stress demonstrates the enduring benefits of G20 post-crisis reforms".[16]
The FSB published the pre-G20 summit letter[17] in light of the "two spikes in uncertainty and risk aversion" weathered by the global economy and financial system as of late July 2016, which outlined its priorities for 2016:
In addition to the priorities listed above, the FSB also sought to:
In November 2016, the FSB and the board of the Bank for International Settlements agreed to a further five-year extension of the agreement from January 2018 to 2023.
