Financial Stability Board
Also called: FSB · Topic: Banking Regulation, NPAs and Financial Stability · NCERT: Beyond NCERT
Meaning
The Financial Stability Board (FSB) is an international body. Its members are national authorities, such as finance ministries, central banks and market regulators, along with global standard-setting bodies. The G20 set it up in 2009, after the 2008 global financial crisis. The FSB watches the world financial system for weak spots and agrees on regulatory policies, which member countries then put into practice. Its recommendations are not binding laws. India is a member.
It matters because of systemic risk: one big failure can set off a chain of failures across countries. No single national regulator can manage that alone.
Example
Each year the FSB publishes the list of Global Systemically Important Banks (G-SIBs). These are banks whose distress would disrupt the global system, so they must hold 1-3.5% extra loss-absorbing capital. No Indian bank is on the list. The FSB, together with the IMF, also tracks the G20 Crypto-asset Policy Implementation Roadmap, which India pushed during its 2023 G20 presidency.
Don't confuse with
- Basel Committee on Banking Supervision (BCBS): sets capital and liquidity standards (the Basel norms) for banks only. The FSB coordinates policy across the whole financial system, including banks, markets, insurance and non-bank lenders.
- Financial Stability and Development Council (FSDC): India's own body, set up in 2010 and chaired by the Finance Minister. It coordinates Indian regulators, while the FSB works at the global level.