The Financial Stability Board (FSB) Regional Consultative Group for Europe convened in Munich, Germany on November 14 and 15. The Deutsche Bundesbank and Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) hosted the meeting.
During the first day, members engaged in a workshop focusing on the financial stability implications of private credit. Discussions revolved around the growth drivers of this credit form and its economic benefits. Concerns were raised about potential risks due to limited market data and existing regulations. The concentration of schemes in riskier market segments poses credit risks, compounded by data gaps, lack of secondary markets for valuations, and limited disclosure.
Members also examined global and regional financial system vulnerabilities. Persistent issues such as government, corporate, and household debt levels were highlighted. August's equity market volatility underscored vulnerabilities in non-bank financial intermediation. Geopolitical risks are expected to remain high, necessitating readiness for uncertainty and volatility in financial markets.
Operational vulnerabilities were another topic of concern. Participants shared experiences regarding the impact of a global IT outage in July on regional financial institutions. They expressed support for the FSB’s public consultation on a Format for Incident Reporting Exchange (FIRE), which aims to streamline operational incident reporting across multiple authorities.
The group reviewed findings from an FSB report that identified vulnerabilities linked to solvency and liquidity risks in high-interest-rate environments. Discussions included technology's role and social media's influence on depositor behavior.
Finally, discussions addressed the FSB’s evaluation of G20 financial regulatory reforms' effects on securitisation. A consultative report assessed these reforms' objectives achievement and securitisation markets' evolution. Members discussed reform impacts within Europe while anticipating the FSB’s final report.
Soledad Núñez, Deputy Governor at Bank of Spain, co-chaired the meeting with Vasileios Madouros, Deputy Governor at Central Bank of Ireland. Representatives from various European countries participated alongside entities like the European Commission and European Central Bank (ECB).
The FSB has six Regional Consultative Groups established under its Charter to facilitate dialogue among financial authorities worldwide about systemic vulnerabilities and initiatives promoting stability.
Klaas Knot chairs the FSB; its Secretariat is based in Basel, Switzerland at the Bank for International Settlements.