Regulatory and Supervisory Modernisation Principles: Consultation Report (Financial Stability Board)

Summary

• A stocktake conducted by the FSB gathered 126 modernisation efforts from 24 jurisdictions and 3 SSBs across various financial sectors and entity types.p.9
• The report presents 8 proposed high-level principles to assist financial authorities in enhancing the effectiveness, efficiency, and risk focus of their supervisory frameworks.p.7
• In Switzerland, qualifying well-capitalised small institutions with a simplified leverage ratio of at least 8% can opt into a dedicated regime with simplified regulatory requirements.p.11

Key insights

1. Modernisation is defined as an ongoing effort by financial authorities to improve the effectiveness, efficiency, risk focus, coherence, and forward-looking nature of regulatory and supervisory frameworks.p.10
2. Financial stability serves as the necessary foundation for sustainable economic growth, which in turn acts to support ongoing financial stability.p.10
3. Proportionality and tailoring enable financial authorities to vary regulatory requirements based on an institution's nature, size, complexity, risk profile, business model, and systemic importance.p.10
4. The proposed principles are designed to preserve or enhance existing levels of financial system resilience without dictating a specific level of regulatory stringency.p.10
5. Financial authorities within the same jurisdiction are encouraged to pursue coherence across their domestic regulatory and supervisory frameworks.p.11
6. Survey findings indicate that modernisation operates primarily as a continuous lens applied throughout everyday supervisory tasks rather than as a periodic discrete exercise.p.21
7. Impact analysis supports transparency and accountability by evaluating the expected costs, benefits, and cumulative impacts of significant regulatory proposals.p.11