Financial Crime World

Financial Stability Reports and Developments

The International Monetary Fund (IMF), Financial Stability Board (FSB), and other organizations have released several financial stability reports highlighting key developments and recommendations for maintaining financial stability.

Recommendations from the FSB

  • Global Stablecoins: The FSB has recommended that global stablecoins should have stabilization methods with sufficient safeguards and prudential requirements.
  • Insurance Supervisors: The FSB endorsed the International Association of Insurance Supervisors’ (IAIS) Holistic Framework to assess and mitigate systemic risks in the insurance sector.

Reports from Other Organizations

  • Climate Scenario Analysis: A report by the NGFS noted that climate-related risks are contained across domestic financial systems, but tail risks and spillovers associated with climate change may not be manageable.
  • Insurance Capital Standards: The IAIS is developing an Insurance Capital Standard for internationally active insurance groups, which will provide holistic standards for supervisory discussions on group solvency.

New Initiatives

  • Resilience and Sustainability Trust: The IMF created a Resilience and Sustainability Trust to help vulnerable countries improve resilience to external shocks by providing financing to address longer-term challenges such as climate change.
  • Good Practices for Designing, Presenting, and Supervising Pension Projections: The International Organization of Pension Supervisors issued guidelines to encourage the provision of meaningful projections on the likely values of retirement funds (of public and private schemes).

Recent Activities

  • IMF Annual Report 2021/22: The report noted that between May 1, 2021, and April 30, 2022, the IMF carried out health checks on 126 countries, lent $113 billion to 23 countries, and spent $242 million on improving technical capacities at finance ministries, central banks, statistical agencies, and financial supervisory agencies.
  • Regional Developments: In several Advanced Economies (AEs), interest rate-sensitive assets came under pressure, leading policymakers to deploy various tools to address strains. Emerging market banks have avoided significant losses in their securities portfolios, but some events have deteriorated global risk appetites.

Conclusion

These reports highlight the need for financial stability and resilience in the face of climate change, emerging risks, and policy challenges.