The Chair of the Financial Stability Board (FSB), Klaas Knot, sent a letter to the G20 Finance Ministers and Central Bank Governors outlining the FSB’s work priorities for 2023. The letter, which was sent ahead of the G20 meeting on 24-25 February, outlines the following workstreams and activities:

• That vulnerabilities in non-bank financial intermediation (NBFI) are first in the list of priorities, particularly those that may be present in commodity markets;
• An upcoming in-depth study on non-bank leverage;
• Further policy work to address liquidity mismatch in open-ended funds;
• Work to enhance liquidity preparedness for margin and collateral calls; and
• A peer review of money market mutual fund policy reform measures.

Knot also confirmed that the FSB will deliver reports to the G20 meeting on:

• The financial stability aspects of commodity markets;
• The financial stability risks of decentralised finance (DeFi); and
• Priority actions for achieving the G20 targets for enhancing cross-border payments.

Knot also outlined additional work to enhance cyber and operational resilience and to address climate-related financial risks.

Lastly, in his letter, Knot emphasises that the global economic outlook remains clouded by uncertainty despite growing expectations of a ‘soft landing’. He also stressed that the near record-high levels of debt, rising debt service costs and stretched asset valuations in some key markets could pose serious threats to financial stability.

For more information, please contact Guillermo Pérez Molina, Private Credit Associate.