FSB Speech on Effective Global Resolution Schemes


The Financial Stability Board (“FSB“) published a speech by Dietrich Domanski, FSB Secretary General, on effective global resolution schemes on June 12, 2018.

The speech covers matters including the following:

  • Funding in resolution. In November 2017, the FSB consulted on guidance on the development of a plan for funding in resolution. Many respondents welcomed the focus on firm capabilities and the operational aspects of a funding strategy.

With regard to both consultations, the FSB intends to reflect suggestions for changes in the final guidance, which it expects to publish in the coming weeks.

  • Bail-in execution. Also in November 2017, the FSB consulted on guidance to assist authorities in making global systemically important bank (“G-SIB“) bail-in resolution strategies operational. Generally, respondents expressed support for the guidance and its focus on the operational aspects of a bail-in.
  • Monitoring and evaluation. The FSB has started work on a thematic peer review of resolution regimes. A report on the peer review will be published in early 2019. The FSB also plans to evaluate the effects of the reforms aimed at ending “too-big-to-fail”. The key objective of the evaluation is to assess whether reforms have accomplished their objective, or whether there are any unintended consequences that may call for adjustments in regulation.
  • Open issues in implementation. Although the publication of the above two guidance papers will assist authorities and firms in their work to operationalise resolution plans, they do not consider many of the details that will need to be worked through at a jurisdictional level, taking into account local legal and regulatory frameworks. These details will need to be considered as part of resolution planning to ensure that resolution strategies can be credibly and feasibly implemented.

The FSB is also carrying out work on two other aspects of authorities’ resolution planning work. It is comparing approaches in FSB jurisdictions to the public disclosure of information on resolution planning and resolvability. It is also looking at trading book wind-down. The wind-down of trading book activity may form part of a restructuring plan for a firm in resolution. The FSB expects to report its findings later in 2018.