For the Financial Stability Board, the spring turmoil underscores the need to better supervise non-bank financial intermediaries. The massive withdrawals from US money market funds have spread stress in the markets.
Now that the central banks have put out the fire, it is time to find a way to consolidate the edifice. This is the message delivered by the Financial Stability Board, the body that oversees global financial regulation, in a report that has just been delivered to G20 leaders.
The investment fund industry and all non-bank financial intermediaries have long been under the supervision of the CSF (also known by the acronym FSB, Financial stability board), but they have never been so clearly in the regulator sight. “The March crisis underlines the need to strengthen the resilience of non-bank financial intermediation”, indicates the institution. Indeed, in a context of “Economic shock” and of “Unprecedented strains on liquidity”, certain mechanisms of the financial system have propagated the stress.