FSB seeks views on public sector backstop funding mechanisms in bank resolution

The Financial Stability Board (FSB) has announced it will conduct a thematic peer review on the implementation of public sector backstop funding mechanisms. The review will evaluate progress by FSB member jurisdictions in implementing Key Attribute 6 (funding of firms in resolution) and the related guiding principles on temporary funding to support the orderly resolution of global systemically important banks (G SIBs) and other banks that may be systemically significant or critical in failure ("banks systemic in failure"). A summary terms of reference is published which details the scope, objectives and process for the review.

The FSB seeks to examine: (i) how financial stability vulnerabilities associated with the liquidity needs of a G-SIB or banks systemic in failure, differ across jurisdictions during resolution and how these vulnerabilities are evolving; (ii) the design, credibility and safeguards of public sector backstop funding mechanisms; and (iii) the challenges experienced in addressing resolution funding and its impact on public sector backstop funding mechanisms. The FSB issued a questionnaire to member authorities to collect information and also seeks feedback from financial institutions, industry and consumer bodies, academics and other stakeholders. The deadline for submissions is 31 March, with the peer review report expected to be published in October.

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