Global Regulator & Central Bank News Roundup
Edition 22026Week of January 12
Global developments
Central bank leaders, including the European Central Bank and Bank for International Settlements, issued a joint statement backing Federal Reserve Chair Jerome Powell following his disclosure of grand jury subpoenas and a potential indictment, commending his integrity and commitment to the Fed’s mandate amid claims of political pressure over interest rate decisions.
In a joint statement, several international central bank leaders expressed full solidarity with Federal Reserve Chair Jerome H. Powell, praising his integrity, focus on his mandate and unwavering commitment to the public interest, and describing him as a respected colleague held in the highest regard. The signatories include the European Central Bank's Christine Lagarde (acting on behalf of the ECB Governing Council), the governors of the Bank of England, Sveriges Riksbank, Danmarks Nationalbank, Swiss National Bank, Norges Bank, Reserve Bank of Australia, Bank of Canada, Bank of Korea and Banco Central do Brasil, as well as the Chair of the Board of Directors and the General Manager of the Bank for International Settlements. The statement followed Powell’s 11 January 2026 remarks that the Department of Justice had served the Federal Reserve with grand jury subpoenas and threatened a criminal indictment related to his testimony before the Senate Banking Committee last June, which concerned in part a multi-year project to renovate historic Federal Reserve office buildings. Powell described the action as “unprecedented” and framed it as part of broader threats and ongoing pressure, arguing the threat of criminal charges was linked to the Federal Reserve setting interest rates based on evidence and economic conditions rather than political preferences; he said he would continue to carry out the Federal Reserve’s mandate of price stability and maximum employment.
The G7 Cyber Expert Group, led by the U.S. Department of the Treasury and the Bank of England, published a non-binding roadmap outlining key steps for a coordinated financial sector migration to post-quantum cryptography and cryptographic agility. The roadmap sets out a flexible, risk- and standards-based approach structured around five migration phases.
The G7 Cyber Expert Group, chaired by the U.S. Department of the Treasury and the Bank of England, released a public statement setting out a high-level roadmap of key considerations and potential activities to support a coordinated migration to post-quantum cryptography and cryptographic agility across the financial sector. It frames the work as non-authoritative context—rather than guidance or regulatory expectations—against the risk that sufficiently advanced quantum computers could undermine widely used cryptographic protocols. The roadmap emphasizes a flexible, risk-based and standards-based approach, including prioritising critical systems and functions, taking inventory of cryptographic assets and third-party dependencies, establishing quantifiable metrics to track progress, and coordinating across jurisdictions and vendors to manage interoperability and supply-chain constraints. It organises migration planning into five broad phases for both financial entities and public authorities - (1) awareness and preparation; (2) discovery and inventory; (3) risk assessment and planning; migration execution; (4) migration testing; and (5) validation and monitoring — alongside ongoing work on governance and risk management, external dependency monitoring, and structured stakeholder dialogue. On timing, the statement notes that guidance cited across jurisdictions and standard-setting and multilateral bodies often points to 2035 as an overall target date for post-quantum cryptography migration, while suggesting that prioritising the most critical systems in 2030–32 could limit downside risk if threats materialise earlier, including under harvest-now-decrypt-later dynamics. The group indicates it will monitor migration progress, share information across jurisdictions, coordinate with standard-setting bodies and stakeholders, facilitate dialogue with technology providers, and revisit timelines and resources as the risk landscape and standards evolve.
The World Federation of Exchanges, as part of a new report, warned of a disconnect between regulatory and industry expectations on quantum computing, urging balanced planning for post-quantum cryptography alongside immediate cyber priorities. The report notes limited technical readiness, constrained resources, and transition challenges, with most members viewing quantum risk as long-term and planning more active assessments from 2027.
The World Federation of Exchanges published a report on quantum computing preparedness that warns of a substantial gap between regulatory and industry expectations and calls for a practical balance between longer-term quantum risks and more immediate operational and cyber challenges. It frames post-quantum cryptography migration as a multi-year undertaking that should be paced with realistic timelines while foundational planning proceeds. Regulatory guidance is described as increasingly coordinated in urging early preparation for post-quantum cryptography, driven by long lead times to upgrade cryptographic systems and the “harvest now, decrypt later” threat. The report points to NIST’s first post-quantum cryptography standards finalised in August 2024 (including ML-KEM, ML-DSA and SLH-DSA) and notes European and global bodies emphasising coordinated action, crypto-agility and risk assessments. A preliminary WFE member survey indicates generative AI risks are consuming most attention and investment, while quantum computing is viewed as a longer-term threat. Most members estimate a 5–10+ year window before cryptographically relevant quantum computers emerge, with deep technical preparedness limited and resourcing proportionate to a long-term risk. The report highlights practical transition constraints including incomplete visibility of embedded cryptography, long-lived systems and data retention, vendor and supply-chain dependencies, algorithm maturity and the cost of building crypto-agility, alongside competing budget pressures. Several members plan more active assessments in 2027 as vendor tooling, standards and market solutions mature. WFE members have begun early steps such as monitoring regulatory developments, engaging vendors, initiating preliminary risk assessments and considering cryptographic inventories, and the working group identified the need for deeper study, a WFE best-practice guide and a structured roadmap for market infrastructures.
The Bank for International Settlements published a literature review on the Basel III Liquidity Coverage Ratio, finding broad support for its effectiveness in boosting high-quality liquid asset buffers and reducing short-term funding risks, while also noting trade-offs such as reduced credit supply and increased risk-taking. The paper identifies open questions following the 2023 banking turmoil, including the calibration of deposit run-off rates and the interaction between liquidity regulation and central bank facilities.
The Bank for International Settlements published BIS Papers No 164, surveying the theoretical and empirical literature on the Basel III Liquidity Coverage Ratio (LCR) and what has been learned about its design, effectiveness and impact since it was phased in from 2015 to 2019. The paper finds that research broadly supports the LCR’s role in increasing banks’ high-quality liquid asset buffers and reducing reliance on fragile short-term funding, while also documenting trade-offs such as potential lending crowd-out and incentives for greater risk-taking. The stocktake restates the LCR’s core mechanics and objectives, including the requirement for unencumbered high-quality liquid assets (HQLA) to cover projected net cash outflows over 30 days and the categorisation of HQLA into Level 1 and Level 2 assets with associated haircuts and caps. It summarises theoretical work that typically frames the LCR as welfare-improving where fire-sale externalities lead banks to overuse short-term debt or hold overly illiquid portfolios, and often characterises capital and liquidity requirements as complements, while emphasising that liquidity buffers can be costly if they displace productive lending and may shift risk-taking or activity toward less-regulated intermediaries. Empirical studies reviewed in the paper suggest banks mainly met the LCR by raising HQLA—often via higher reserve and government bond holdings—alongside more modest changes in funding structures, with evidence in some settings of reduced credit supply, lower profitability and increased asset opacity or shifts into harder-to-value and riskier assets. The paper notes that the 2023 banking turmoil has prompted analytical work to re-examine assumptions underpinning the LCR and liquidity regulation more broadly, given the speed of uninsured deposit runs and the potential encumbrance of liquid assets for operational needs. It highlights unresolved questions on the calibration of deposit run-off rates in a world of digital banking and large operational deposits, the extent of any aggregate credit and risk migration effects, whether the LCR dampens or amplifies cyclicality through buffer usability, and how liquidity regulation should interact with central bank lending facilities and other policy tools.
An new International Monetary Fund working paper explores how fiat-backed stablecoins could transmit liquidity stress to financial markets via redemption-driven feedback loops, particularly as issuers grow systemically significant. The analysis finds that stronger solvency and liquidity buffers are most effective in mitigating destabilising redemptions and bond sales, while redemption gates and shorter portfolio durations mainly affect timing and market impact during stress.
The International Monetary Fund published a working paper examining how fiat-backed stablecoins could transmit liquidity stress to financial markets as reserve portfolios grow and issuers become systemically relevant. It sets out a redemption-driven feedback loop in which reserve depletion and forced asset sales can weaken an issuer’s solvency, erode confidence and intensify redemptions, with spillovers into sovereign bond markets. The paper pairs a financial-economics discussion with a simulation model linking design choices such as capital and liquidity buffers, reserve composition, redemption gates and portfolio duration to outcomes including run frequency, fire sale intensity, bond price and yield effects and market volatility. The analysis points to a complementary role for these design levers, with stronger solvency and cash buffers most associated with reducing the likelihood and severity of destabilising redemptions and bond sales, while gates and shorter duration holdings mainly reshape the timing of outflows and dampen market impact once stress materialises. As a working paper, it is released to elicit comments and encourage debate, and it outlines potential extensions including higher-frequency simulations, network and multi-country settings, and calibration to real-world stablecoins to infer prudential requirements consistent with target tail-risk probabilities.
The Egmont Group’s Europe II Regional Group published a horizontal review of 23 jurisdictions' mutual evaluations, highlighting stronger results on international cooperation than on financial intelligence use. Key drivers of higher effectiveness included systematic law enforcement use of financial intelligence unit outputs, while weaker ratings reflected limited utilisation, poor reporting quality, and constrained international information exchange.
The Egmont Group of Financial Intelligence Units’ Europe II Regional Group has published a horizontal review of mutual evaluation reports covering 23 jurisdictions assessed under the Financial Action Task Force and MONEYVAL processes. The analysis focuses on Immediate Outcome 6 on the use of financial intelligence and relevant aspects of Immediate Outcome 2 on international cooperation, alongside Financial Action Task Force Recommendations 29 and 40, to identify recurring drivers of effectiveness ratings across the region. Across the dataset, international cooperation outcomes were generally stronger than financial intelligence outcomes: Immediate Outcome 2 had no low-rated jurisdictions (61% substantial, 35% moderate, 4% high), while Immediate Outcome 6 was mostly moderate (65% moderate, 22% substantial, 9% low, 4% high). Higher-rated systems commonly showed systematic law enforcement use of FIU disseminations in investigations, asset tracing and prosecutions, supported by stronger IT, broad access to financial, administrative and law enforcement data, and structured domestic coordination. Lower-rated systems were associated with underutilisation of FIU products by law enforcement, delays and limited spontaneity in international exchanges, weak prioritisation and feedback mechanisms, resource constraints, and low-quality or defensive suspicious transaction reporting—particularly from non-financial sectors and designated non-financial businesses and professions—alongside infrequent parallel financial investigations, especially for foreign predicate offences. Recommended actions recurring across jurisdictions include strengthening FIU resourcing and analytical capacity, improving the quality and timeliness of suspicious transaction reporting and the reporting process, expanding proactive and spontaneous international information sharing, and establishing clearer prioritisation and feedback loops domestically and with foreign counterparts. The review also highlights reforms aimed at increasing the regular operational use of FIU disseminations by law enforcement and improving how effectiveness is tracked, including calls to move toward measuring financial intelligence use by case outcomes rather than request volumes.
The Financial Markets Standards Board has published its proposed 2026 workplan across five Committees and a new buy-side forum, prioritising conduct and operational issues in wholesale financial markets. Key initiatives include pre-hedging and grey market trading guidance, behavioural work on quotation mechanisms and new issuance swaps, AI-related publications for electronic trading, ongoing conduct work on non-financial misconduct, and upcoming outputs on client onboarding, digital identity, and tokenised instruments.
The Financial Markets Standards Board (FMSB) has published its proposed programme of work for 2026 across five Committees and a newly established buy-side forum, setting out priority areas where it expects to develop standards and related outputs for behaviour in wholesale financial markets. The workplan focuses on conduct-related and operational issues with potential implications for market fairness and effectiveness, with priorities described as indicative and capable of evolving. Planned and ongoing work includes Market Practices initiatives on pre-hedging disclosure and consent, with a Working Group established following IOSCO’s pre-hedging report, and a Statement of Good Practice on grey market trading, for which a draft has been published and finalisation is expected in the first half of 2026. Exploratory work is expected to begin in the first quarter of 2026 on behavioural guidance for market quotation mechanisms and on evolved practices for new issuance swaps, alongside a potential workstream on price discovery and the distinction between legitimate activity and behaviours such as spoofing. Under Electronic Trading and Technology, FMSB plans a publication in the first quarter of 2026 on market-facing applications of artificial intelligence in wholesale markets and flags a potential update to model risk management good practice for electronic trading algorithms to reflect changes linked to AI use cases. Conduct & Ethics work on non-financial risk and non-financial misconduct remains ongoing, with the latter drawing on themes highlighted in the UK Financial Conduct Authority’s culture and non-financial misconduct survey. Market Infrastructure and Operations includes January 2026 publications on client onboarding country sheets for standard KYC under the UK framework and updated manual templates for sharing standard settlement instructions consistent with ISO20022, alongside ongoing work on digital identity and potential workstreams on cyber-risk due diligence questionnaires and on stablecoins and tokenised deposits. FMSB expects to launch dedicated buy-side forum focus sessions in the first quarter of 2026 and to update the workplan after the Sustainable Finance Committee’s horizon-scanning discussions in the first quarter of 2026.
IMF staff published a note examining how emerging skills, particularly in information technology and artificial intelligence, are reshaping labour markets and driving wage premia, with varying employment impacts across economies. It proposes new indexes to assess skill mismatches and recommends tailored education, reskilling, and firm-level policy responses to address imbalances and diffusion frictions.
International Monetary Fund (IMF) staff has published a Staff Discussion Note analysing how the rise and diffusion of new skills—especially information technology and AI-related skills—are reshaping labour markets and what policy priorities can narrow emerging skill gaps. It estimates that roughly one in ten job postings in advanced economies requires at least one new skill, versus about one in twenty in emerging market economies, and links the expansion of these skills to higher wages and, in some settings, higher employment alongside greater job polarisation that largely bypasses middle-skilled workers. Using Lightcast vacancy data and wage offers, the note reports that postings listing new skills carry a wage premium of about 3–3.4 percent in the United States and the United Kingdom, with larger premia where multiple new skills are required. Local labour-market estimates associate a one percentage point increase in the share of postings requiring new skills with a 2.3 percent rise in average wages and a 1.3 percent rise in employment in US commuting zones, while Germany shows a 0.9 percent wage gain with no statistically significant employment effect over the period assessed. By contrast, the growing prevalence of AI-related new skills—rising to almost 5 percent of US postings by 2025—does not translate into overall employment gains and is linked to lower employment for occupations that are highly exposed to AI with limited scope for complementarity; five years after AI-skill entry, regions with a one percentage point higher demand for AI-related skills show employment levels 6.3 percent lower for these occupations. To guide country-level responses, the paper introduces a Skill Imbalance Index and a Skill Readiness Index, recommending education and reskilling measures where demand outpaces domestic supply and policies to boost firms’ absorption of skills—through innovation and improved access to finance—where supply capacity is relatively strong. It also flags “acquire-hire” mergers and non-compete agreements as potential frictions to skill diffusion.
The Network for Greening the Financial System has released a technical note exploring liability-side tools to integrate climate considerations into monetary policy, such as climate-sensitive reserve requirements and sustainability-linked central bank debt instruments, where compatible with central bank mandates. The note also outlines enhancements to asset-side measures, cites early country examples, and addresses implementation challenges around mandates, market neutrality, and data.
The Network for Greening the Financial System (NGFS) has published a technical note that broadens its existing work on greening monetary policy operations by setting out additional options that extend beyond asset-side adjustments. The note frames these options as relevant where central bank mandates and operating frameworks permit climate-related considerations to be incorporated into monetary operations without compromising primary price or currency stability objectives. The paper focuses on liability-side tools that could create more persistent incentives over the monetary policy cycle, including climate-sensitive reserve requirements and the issuance of central bank short-term debt instruments with sustainability features. Options discussed include carving out or lowering minimum reserve requirements for eligible green deposits or deposit funding linked to green lending, and differentiating reserve remuneration through tiering tied to green activity, alongside a concept of green monetary bills backed by sustainable assets with associated impact tracking and added risk-management considerations. It also outlines ways to enhance asset-side measures, including longer-term targeted refinancing operations with climate-linked conditionality, extending liquidity support to non-bank financial institutions engaged in sustainable finance, and applying climate-related criteria in collateral frameworks and monetary portfolios, while highlighting implementation challenges around mandate constraints, market neutrality, monetary transmission, operational complexity, and data and verification. The note highlights early country examples of reserve requirement adjustments, including Lebanon’s partial exemptions linked to environmentally friendly lending and the Philippines’ zero percent reserve requirement rate for banks’ sustainable bonds compared with three percent for non-green bonds, subject to specified eligibility frameworks. It also describes the Central Bank of the United Arab Emirates’ development of a Sustainable Islamic M-Bills programme, where preparatory work has been completed and the next steps include preparing implementation options and seeking board approval, with the programme positioned as a potential first-of-its-kind issuance framework once operational.
Active global consultations
The Board of the International Organization of Securities Commissions is consulting on proposed updates to its standards for valuing collective investment schemes, replacing its 2013 principles for these schemes and its 2007 principles for hedge fund portfolios with one set of 13 Recommendations. The consultation reflects market changes since those standards were issued, including more collective investment schemes holding less liquid and illiquid assets, including private assets; greater retail investment in such schemes; and valuation challenges during periods of market stress. The proposed Recommendations focus on registered, authorized or public open-ended funds. They may also serve as good practices for other funds, while money market funds are excluded. The Recommendations cover valuation policies and governance, including independent oversight and arrangements for stressed markets; conflicts of interest and related disclosure; valuation methodology, including fair value, back testing, calibration, price overrides and consistent application; and the use and oversight of third party valuation service providers. They also address forward pricing, alignment of valuation and dealing frequency, controls for stale valuations, net asset value and valuation disclosures, detection and correction of pricing errors, investor compensation where material harm occurs, and record keeping to support compliance, audits and regulatory oversight.
The Board of the International Organization of Securities Commissions is consulting on proposed updates to its standards for valuing collective investment schemes, replacing its 2013 principles for these schemes and its 2007 principles for hedge fund portfolios with one set of 13 Recommendations. The consultation reflects market changes since those standards were issued, including more collective investment schemes holding less liquid and illiquid assets, including private assets; greater retail investment in such schemes; and valuation challenges during periods of market stress. The proposed Recommendations focus on registered, authorized or public open-ended funds. They may also serve as good practices for other funds, while money market funds are excluded. The Recommendations cover valuation policies and governance, including independent oversight and arrangements for stressed markets; conflicts of interest and related disclosure; valuation methodology, including fair value, back testing, calibration, price overrides and consistent application; and the use and oversight of third party valuation service providers. They also address forward pricing, alignment of valuation and dealing frequency, controls for stale valuations, net asset value and valuation disclosures, detection and correction of pricing errors, investor compensation where material harm occurs, and record keeping to support compliance, audits and regulatory oversight.
The Financial Stability Board is seeking feedback on draft guidance for identifying the insurers that should fall within recovery and resolution planning requirements under the Key Attributes of Effective Resolution Regimes for Financial Institutions. The consultation follows the end of the annual global systemically important insurer identification process and sets out how national resolution or supervisory authorities should decide whether an insurer could be systemically significant or critical upon failure, or could affect financial stability if it fails. The draft guidance proposes that authorities apply established criteria covering an insurer’s nature, scale, complexity, substitutability, cross-border activities and interconnectedness, supported by explanatory comments and illustrative indicators that allow for consistent assessment while preserving flexibility for different markets, legal frameworks and supervisory practices. It also specifies cases where recovery and resolution planning should apply regardless of the broader criteria assessment, including when an insurer performs a critical function that cannot be replaced within a reasonable time and cost, or when its failure is likely to significantly affect the financial system or the real economy, including through material harm to policyholders, systemic disruption or loss of confidence. The consultation further proposes aligning Financial Stability Board guidance on critical functions so that a material impact on either the financial system or the real economy would be enough to bring the function within scope.
The Financial Stability Board is seeking feedback on draft guidance for identifying the insurers that should fall within recovery and resolution planning requirements under the Key Attributes of Effective Resolution Regimes for Financial Institutions. The consultation follows the end of the annual global systemically important insurer identification process and sets out how national resolution or supervisory authorities should decide whether an insurer could be systemically significant or critical upon failure, or could affect financial stability if it fails. The draft guidance proposes that authorities apply established criteria covering an insurer’s nature, scale, complexity, substitutability, cross-border activities and interconnectedness, supported by explanatory comments and illustrative indicators that allow for consistent assessment while preserving flexibility for different markets, legal frameworks and supervisory practices. It also specifies cases where recovery and resolution planning should apply regardless of the broader criteria assessment, including when an insurer performs a critical function that cannot be replaced within a reasonable time and cost, or when its failure is likely to significantly affect the financial system or the real economy, including through material harm to policyholders, systemic disruption or loss of confidence. The consultation further proposes aligning Financial Stability Board guidance on critical functions so that a material impact on either the financial system or the real economy would be enough to bring the function within scope.
Regional developments
South Korea’s National Assembly has passed amendments to recognize blockchain-based distributed ledgers as a legal securities registry, enabling the issuance and circulation of security tokens under the existing regulatory framework. The revised legislation, which also permits investment contract securities to be circulated through licensed securities businesses, will take effect in January 2027.
South Korea’s Financial Services Commission announced that the National Assembly has passed amendments to the Act on Electronic Registration of Stocks and Bonds and the Financial Investment Services and Capital Markets Act, establishing a legal basis to introduce and circulate security tokens. Security tokens are defined as digitized securities whose issuance and circulation records are managed on a blockchain-based distributed ledger. Under the revised Act on Electronic Registration of Stocks and Bonds, distributed ledgers are legally recognized as a securities registry, enabling securities to be issued in tokenized form, with issuers required to follow prescribed procedures and qualifications to notify and apply for electronic registration with the Korea Securities Depository. Security tokens remain subject to the existing securities regulatory framework under the Financial Investment Services and Capital Markets Act, including licensing restrictions and securities registration and disclosure requirements. Separately, the revision to the Financial Investment Services and Capital Markets Act is focused on a specific instrument type, allowing investment contract securities to be circulated through securities businesses, reversing a prior prohibition that required issuers to recruit investors directly; the release notes that such circulation is expected to take place in the form of security tokens. The revised legislation is expected to take effect one year after promulgation, with implementation expected in January 2027.
The European Supervisory Authorities signed a Memorandum of Understanding with the Bank of England, the Prudential Regulation Authority, and the Financial Conduct Authority to enhance cross-border oversight of critical ICT third-party service providers under the Digital Operational Resilience Act. The agreement outlines information-sharing procedures, cross-border inspection protocols, and confirms the UK’s confidentiality regime as equivalent for supervisory cooperation.
The European Supervisory Authorities (ESA) signed a Memorandum of Understanding (MoU) with the Bank of England (BoE), the Prudential Regulation Authority (PRA), and the Financial Conduct Authority (FCA) to strengthen cooperation on oversight of critical ICT third-party service providers under the Digital Operational Resilience Act (DORA). The MoU sets principles and procedures for cooperation, information sharing, and coordination of oversight activities for EU critical ICT third-party service providers (CTPPs) and UK critical third parties (CTPs), including in emergency situations. The arrangement is prepared under DORA Articles 36, 44 and 49, covering the ESAs’ oversight powers, international cooperation, and cross-sector cyber incident coordination. Ahead of signature, the ESAs assessed the UK confidentiality and professional secrecy regime and confirmed its equivalence to DORA’s requirements for information exchange with a third-country authority. Operationally, the MoU establishes processes for written exchange of information via secure electronic means, application of the Traffic Light Protocol for handling shared information, and mechanisms to coordinate cross-border on-site inspections. For non-EU CTPPs, DORA permits EU financial entities to use their services only if an EU subsidiary is established within 12 months of designation, which serves as the primary contact point for ESA oversight. where ESAs cannot meet oversight objectives via EU subsidiaries and seek to inspect UK premises, the MoU specifies notification timelines and conditions. Parallel coordination procedures apply where UK authorities seek on-site access in the EU for designated CTPs.
The European Securities and Markets Authority (ESMA) issued a second thematic note on sustainability-related claims, outlining four principles—accuracy, accessibility, substantiation and currency—for ESG communications, with emphasis on integration and exclusions. The non-binding guidance targets non-regulatory materials, particularly for retail investors, and clarifies expectations for describing ESG strategies to mitigate greenwashing risks.
The European Securities and Markets Authority (ESMA) published a second thematic note on clear, fair and not misleading sustainability-related claims, setting out how market participants should communicate about ESG strategies to mitigate greenwashing risks, with a focus on ESG integration and ESG exclusions. The note is educational and builds on observed market practices across the sustainable investment value chain. It sets four principles for sustainability claims, requiring that communications are accurate, accessible, substantiated and kept up to date, and clarifies that it does not create new disclosure requirements. The guidance applies to non-regulatory oral and written communications, including marketing materials and voluntary reporting, with particular attention to materials directed at retail investors and the use of layering to make substantiation easy to find. For ESG integration, the note expects plain-language definitions and transparency on whether integration is binding, whether ESG factors trigger portfolio decisions, how they are incorporated into analysis and portfolio construction, and the extent of any impact on portfolio composition. For ESG exclusions, it highlights the need to explain the exclusion process, criteria and thresholds, whether exclusions are absolute or threshold-based, whether they rely on a materiality assessment, and how meaningful the exclusions are for the investable universe and portfolio, supported by practical do’s and don’ts and illustrative examples. ESMA indicated that further thematic notes may follow and that the notes should be read together as a thematic study.
The Swiss Financial Market Supervisory Authority (FINMA) has issued Guidance 01/2026 detailing its expectations for the custody of cryptobased assets, with emphasis on managing operational and insolvency risks, particularly in outsourced or cross-border settings. It outlines requirements for Swiss banks and other supervised entities across key activities, stressing the need for robust technical infrastructure, enforceable insolvency protection, and client protection measures, especially where third-party custody arrangements are used.
Swiss Financial Market Supervisory Authority FINMA has published Guidance 01/2026 on the custody of cryptobased assets, setting out how it assesses custody risks and the requirements supervised institutions must meet to keep such assets safe. The guidance responds to growing market demand for trading, investment and custody services relating to cryptobased assets and highlights technology-driven operational risks and insolvency-related risks, particularly where custody is outsourced or provided cross-border. The guidance focuses on distributed ledger technology-related vulnerabilities, including cyber attacks and inadequate protection of private keys, and emphasises the need for appropriate expertise and robust technical infrastructure. It also flags counterparty and legal risks where custody is delegated to third parties, especially abroad, including ensuring that cryptobased assets can be segregated and benefit from equivalent bankruptcy protection if a custodian becomes insolvent. FINMA outlines supervisory-law treatment across key activities, including custody by Swiss banks, individual portfolio management, the safekeeping of fund assets under the Collective Investment Schemes Act, and the offering of structured products or crypto exchange-traded products, including expectations on prudential supervision of custodians and enforceable insolvency protection for assets held as security. FINMA places responsibility on institutions to ensure custody arrangements meet the stated requirements and to adjust arrangements that do not, in the interests of client protection. Where certain non-fully aligned arrangements are retained by exception in individual portfolio management, the portfolio manager must be able to evidence enhanced client risk disclosure, information on alternative suitable custodians, and the client’s written consent, and FINMA stresses that client-protection requirements should not be circumvented through foreign structures.
Austria’s Financial Market Authority and Oesterreichische Nationalbank issued a joint update on the implementation of the EU Digital Operational Resilience Act, highlighting enhanced supervisory visibility through harmonised ICT risk requirements and reporting. In 2025, 103 major ICT-related incidents were reported—63% involving external providers—and key developments include the establishment of ICT service provider registers, the completion of a penetration testing pilot phase, and the identification of 19 significant third-party providers now under EU-level oversight.
Austria’s Financial Market Authority (FMA) and Oesterreichische Nationalbank (OeNB) published a joint update on implementing the EU Digital Operational Resilience Act (DORA), framing its first year as improving supervisory visibility over digital risks through harmonised requirements for incident reporting, security testing and third-party ICT risk management. In 2025, Austrian financial undertakings notified the FMA of 103 major ICT-related incidents, with 63% linked to external ICT service providers. The new Registers of Information for ICT Service Providers is intended to help the FMA and OeNB assess potential systemic impacts and improve cross-European coordination when incidents occur, alongside an EU-wide basis for exchanging cyber-threat information. Systemically relevant entities are required to perform threat-led penetration tests every three years, supported by the OeNB’s TIBER-Cyber-Team and the FMA; obliged entities have been identified and informed, and a preparatory pilot phase has been completed. DORA also introduces direct monitoring of significant ICT third-party providers: 19 providers, including Amazon, Microsoft and Google, were identified at the end of 2025 and will be monitored EU-wide by the European Banking Authority, European Securities and Markets Authority and European Insurance and Occupational Pensions Authority, with the FMA and OeNB participating through the Joint Oversight Network. Identified risks are to be communicated to affected financial undertakings and, as a last resort, firms may be ordered to suspend services
The European Central Bank has finalized its 2024–2025 climate and nature plan, integrating climate and nature-related risks more deeply into monetary policy, banking supervision, and internal operations. Key actions include further embedding these risks into the Eurosystem collateral framework, enhancing stress testing and scenario analysis, reducing emissions from corporate bond holdings and ECB operations, and prioritizing transition, physical, and nature-related risks in upcoming work.
The European Central Bank (ECB) has announced the completion of its 2024-2025 climate and nature plan, embedding climate and nature-related risks more deeply into its day-to-day work across monetary policy, banking supervision, and the management of its own portfolios and operations. The update positions these risks as inputs to policy decisions and operational processes within the ECB’s mandate. Within the monetary policy framework, climate and nature-related considerations have been further incorporated, including in the Eurosystem collateral framework, alongside a reduction in the carbon emissions of the Eurosystem’s corporate bond holdings. Climate considerations, including transition policies such as Emissions Trading System 2, now feature in macroeconomic assessments and projections. Data and analytical capabilities were advanced through climate stress testing and scenario analysis, including the Fit-for-55 exercise, and through the ECB’s role in designing climate scenarios within the Network for Greening the Financial System; statistical climate indicators were also updated with new methodologies and data. In supervision, continuous follow-up by ECB Banking Supervision has supported banks’ ability to assess climate and nature risks, including binding decisions where required. The ECB also continued integrating climate considerations into its non-monetary policy portfolios and reported a 39% reduction in emissions from its own operations in 2024 compared with 2019; on nature, its updated monetary policy strategy statement explicitly acknowledges the implications of nature degradation, with ECB research identifying water-related risks as the most material. Future work will focus on three priorities: supporting the transition to a green economy, including assessing banks’ prudential transition plans and exploring further incorporation of climate considerations into the operational framework; strengthening analysis and monitoring of the growing physical impacts of climate change, including further assessment of banks’ capabilities to tackle physical risk; and deepening work on nature-related risks and ecosystem degradation, including the impact of water-related risks. These priorities are intended to complement ongoing actions across monetary policy, supervision and financial stability, including implementation of the climate factor in the Eurosystem collateral framework and further development of scenario and stress test methodologies.
The European Insurance and Occupational Pensions Authority (EIOPA) has set out its 2030 strategy, prioritizing Single Market integration, enhanced resilience to systemic and societal risks, and more agile, simplified regulation and supervision. The strategy outlines intensified supervisory and enforcement actions, cross-border coordination on digital and operational resilience, earlier legislative engagement, and expanded use of data and supervisory technology to streamline oversight and reduce administrative burden.
The European Insurance and Occupational Pensions Authority (EIOPA) has published its strategy towards 2030, setting three priority areas for its work on insurance and occupational pensions supervision in the European Union. The strategy focuses on strengthening Single Market integration, enhancing market and societal resilience against risks, and making regulation and supervision simpler, bolder and faster. Single Market priorities include convergent supervisory practices and consistent consumer protection, supported by technical support and knowledge exchange with national competent authorities. The authority plans to use the full range of supervisory powers and enforcement tools to address prudential and conduct issues, strengthen supervision of internal models, and intensify action on conduct risks to tackle poor value for money, unfair practices and exclusion risks. Oversight of critical third-party service providers and joint work with the other European Supervisory Authorities on digital operational resilience form part of the approach, alongside deeper global engagement through coordination on International Association of Insurance Supervisors topics, contribution to a common Insurance Capital Standard, cooperation with third-country supervisors and monitoring of equivalence decisions. Resilience work is framed around enhanced risk monitoring and data sharing, crisis prevention, management and resolution, early-warning mechanisms and joint threat exercises, and initiatives to address protection gaps such as pensions, natural catastrophes, cyber threats and health risks in collaboration with other EU and international authorities. Regulation and supervision are to be made more efficient through earlier engagement in the EU legislative cycle with data-driven technical advice and impact assessments, simplification to reduce duplication and administrative burdens while maintaining financial stability and consumer protection, greater proportionality for smaller and non-complex entities, and increased use of supervisory technology, shared tools and EU data infrastructures to streamline reporting and strengthen data governance through 2030.
The European Securities and Markets Authority (ESMA) adopted a Digital Strategy for 2026–2028 and updated its Data Strategy 2023–2028 to align digital and data initiatives in support of EU financial market supervision. Key deliverables include streamlined supervisory reporting, expansion of the ESMA Data Platform, enhanced crypto-asset monitoring, implementation of ESMA’s Cybersecurity Plan, and deployment of generative AI tools.
The European Securities and Markets Authority (ESMA) adopted a Digital Strategy for 2026–2028 and updated its Data Strategy 2023–2028, aligning its technology and data programmes to support supervision of EU financial markets and to simplify regulatory reporting and data management. The Digital Strategy sets four strategic objectives for ESMA’s digital transformation: building EU digital synergies, enhancing digital capabilities of the European System of Financial Supervision, bolstering operational efficiency, and establishing a best-of-breed secure ecosystem underpinned by cybersecurity, zero-trust practices and a cloud and Software-as-a-Service-first approach. The Data Strategy update keeps existing objectives but adds actions aimed at burden reduction, including flagship initiatives to streamline supervisory reporting for transaction data and funds, expansion of the ESMA Data Platform for national and European authorities, further phases of the Markets in Crypto-Assets joint supervisory tool for crypto-asset market monitoring, and completion of the European Single Access Point. The 2026–2028 roadmap links the strategies to planned deliverables such as a dedicated platform to share Digital Operational Resilience Act incident information with European Supervisory Authorities and national competent authorities, migration of datasets and analytics to the ESMA Data Platform, rollout of generative AI assistants to staff with usage guidance, and implementation of ESMA’s Cybersecurity Plan aligned with the EU Cybersecurity Regulation.
The Prudential Regulation Authority (PRA) has outlined its 2026 supervisory priorities, including a shift to biennial Periodic Summary Meetings for larger firms from 1 March 2026 and initiatives to reduce supervisory burden. Key priorities span insurer liquidity and reinsurance risks, underwriting discipline, and Basel 3.1 and Strong and Simple Framework implementation by January 2027.
The Prudential Regulation Authority (PRA) published letters setting out its 2026 supervisory priorities for banks, building societies, insurers and other PRA-regulated firms, alongside measures to streamline supervision and reduce engagement burden. For insurers, the PRA flagged continued focus on competitive pressures in the bulk purchase annuity market, growing use of funded reinsurance and evolving investment strategies, including potential liquidity risks, and said it will provide a further update on funded reinsurance policy proposals in the second quarter. General insurance priorities include maintaining underwriting and reserving discipline as the cycle softens, addressing overly optimistic internal model assumptions that could understate Solvency Capital Requirements (SCRs), improving exposure data quality, and strengthening oversight of delegated authority business; the PRA will run the Dynamic General Insurance Stress Test in May 2026. For deposit takers and international banks, priorities emphasise strategic risk management, counterparty credit risk and increasing exposures to non-bank financial institutions, operational resilience and third-party dependency risks, and stronger data governance, alongside preparation for implementation of most Basel 3.1 and the Strong and Simple Framework on 1 January 2027, including a 2026 rebasing of variable Pillar 2 requirements with data submissions due by 31 March 2026. Periodic Summary Meetings (PSMs), the PRA’s formal internal reviews used to assess firm risks and set supervisory strategy, will move further towards a two-year cycle, with larger firms starting the transition from 1 March while maintaining regular dialogue and ad hoc meetings on material issues. Other streamlining steps include faster review of Senior Manager applications, new firm authorisations and internal ratings-based model change pre-approval applications, and modernisation of regulatory reporting through the Future Banking Data programme. The PRA intends to consult on a new UK captive regime for insurers in summer 2026 with a view to launch in 2027, will require in-scope insurers to produce a Solvent Exit Analysis by 30 June 2026, and will implement new insurer liquidity reporting requirements on 30 September 2026.
The European Commission has launched targeted and public consultations to identify barriers faced by EU venture and growth capital fund managers and assess potential reforms, including to the European Venture Capital Fund (EuVECA) Regulation. The consultations will inform a broader review addressing regulatory proportionality, Alternative Investment Fund Managers Directive (AIFMD) thresholds, and framework streamlining while preserving investor protection and supervision.
The European Commission has opened a targeted consultation and a public consultation to collect evidence on obstacles faced by EU venture and growth capital fund managers and potential measures to address them, supporting its work under the savings and investments union and the startup and scaleup strategy. The exercise is intended to inform a review of the European Venture Capital Fund (EuVECA) Regulation planned for adoption in the third quarter of 2026, alongside consideration of a broader initiative that would extend beyond the EuVECA framework to cover a wider range of venture and growth capital fund managers. The targeted consultation explores, among other topics, whether the EU framework could be made more proportionate to fund managers’ size and risk profile, including calibration of Alternative Investment Fund Managers Directive (AIFMD) thresholds and potential “cliff-edge” effects when managers move above the EUR 500 million assets-under-management threshold, as well as issues affecting small-size nationally registered managers below that threshold and mid-size AIFMD-authorised managers. It also covers the functioning of the EuVECA and European Social Entrepreneurship Funds (EuSEF) frameworks and potential areas for streamlining requirements and reducing fragmentation while maintaining investor protection and effective supervision. Both consultations are open until 12 March 2026, and responses will feed into the Commission’s policy-development work on venture and growth capital funds.
The Brazilian Securities and Exchange Commission has overhauled its internal structure to strengthen supervision, enforcement, and integrity functions, establishing 35 new commissioned positions and two superintendencies: the Superintendence for Intelligence Development and the Superintendence for Market, Derivatives and Systemic Risk Supervision. The reform expands technological capabilities for data-driven oversight, reassigns systemic risk supervision, and grants greater autonomy to the Ombudsman and Internal Affairs units.
The Brazilian Securities and Exchange Commission announced a major reorganisation of its internal structure to expand supervision, enforcement, and integrity functions, including the creation of two new superintendencies and additional commissioned roles. The changes create 35 new commissioned positions and functions and establish the Superintendence for Intelligence Development (SDI) and the Superintendence for Market, Derivatives and Systemic Risk Supervision (SMD). SDI is mandated to support supervision and enforcement through advanced technologies and large-scale data analysis, including integration with external databases and the use of public and open data. The structure also includes initiatives using artificial intelligence to identify misconduct and irregularities, and internal activities related to data governance, protection, and management. SMD assumes market-monitoring competencies previously linked to the Superintendence for Market and Intermediaries Relations (SMI) and expands the remit to derivatives supervision and work on systemic and macroprudential risks, including oversight of secondary-market operations and mapping financial relationships among capital markets entities and their potential systemic impacts. The reorganisation also gives the Ombudsman (OUV) and Internal Affairs/Corregedoria (COR) autonomous structures separate from Internal Audit (AUD), and increases technical rapporteur adviser capacity to support directors in matters before the Collegiate body to reduce adjudication time.
The Bank of Israel will expand the identification code format for entities connecting to payment systems from two to three digits, enabling greater participation by nonbank entities including fintech firms. Implementation schedules will be published in 2026 following a consultation process with market participants and regulators.
The Bank of Israel announced a decision to expand the identification codes used by banking corporations and nonbank entities to connect to payment systems from two digits to three. Connection to the payment systems is conditioned on identification using this code; expanding the format is intended to increase the number of participants that can connect. The change is positioned to support nonbank entities, including domestic and international fintech firms, operating as direct participants alongside banks, thereby also strengthening competition in the payment system. The change follows a prolonged examination process that included consultation with financial system participants, regulators, and other stakeholders. The Bank of Israel will publish implementation schedules during 2026 for the expanded identification code.
South Africa’s National Treasury welcomed the EU’s decision to remove it from the high-risk third-country list from 29 January 2026 and released a revised draft AML/CFT Amendment Bill, 2025 addressing remaining Financial Action Task Force deficiencies. The Bill proposes expanded Financial Intelligence Centre powers, stricter beneficial ownership sanctions, and new measures on non-governmental organisations and lifestyle audits.
South Africa’s National Treasury issued two anti-money laundering and combating the financing of terrorism (AML/CFT) updates, covering both cross-border de-risking frictions and domestic legislative strengthening. It welcomed the European Union’s decision to remove South Africa from the list of high-risk third-country jurisdictions, which will remove the EU-law requirement for EU financial institutions to apply enhanced due diligence to South Africa-related transactions from 29 January 2026. National Treasury also published an updated draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2025 for public comment, aimed at addressing remaining deficiencies identified through the Financial Action Task Force (FATF) mutual evaluation process. The EU delisting follows South Africa’s removal from the FATF greylist and the United Kingdom’s high-risk list on 13 October 2025 and lifts the EU-law enhanced due diligence requirement, while leaving firms’ own risk policies unchanged. The decision also removes Burkina Faso, Mali, Mozambique, Nigeria and Tanzania. On the legislative package, National Treasury said the updated draft Bill builds on the December 2024 draft and adds amendments related to non-governmental organisations and lifestyle audits, with work conducted alongside relevant departments, the Financial Intelligence Centre, and financial sector regulators. Proposed amendments span the Financial Intelligence Centre Act, 2001, the Financial Sector Regulation Act, 2017, the Companies Act, 2008, and the Nonprofit Organisations Act, 1997, including targeted financial sanctions provisions, expanded information-sharing powers for the Financial Intelligence Centre, tighter treatment of new technologies and anonymous clients in customer due diligence, strengthened penalties under the Nonprofit Organisations Act, and more dissuasive and proportionate sanctions for beneficial ownership non-compliance under the Companies Act, alongside strengthened market conduct, licensing and enforcement powers under the Financial Sector Regulation Act.
The Jordan Securities Commission has released draft 2026 executive instructions for virtual asset activities, establishing licensing, prudential, governance and investor protection requirements across four service categories ahead of the new virtual asset service provider regime. The draft introduces custody mandates, suitability checks, marketing restrictions, and financial safeguards, with stakeholder comments invited and preliminary approval forms now available.
The Jordan Securities Commission has published draft 2026 executive instructions for virtual asset activities, aligned with the entry into force of the 2026 virtual asset service provider licensing system. Across four license categories, the draft sets requirements for platform operation, custody, brokerage and offering-related services, and adds cross-cutting rules on governance, outsourcing, periodic reporting, external auditing, and technical and cybersecurity controls. Investor protection provisions include client classification, suitability checks for complex or high-risk assets for retail clients, limits on misleading marketing, and prohibitions on dealing in privacy tokens and algorithmic stablecoins, alongside powers to restrict or suspend trading in specific assets. Custody provisions include segregation of client assets, a minimum of 95% of client assets held in offline cold wallets, daily reconciliations where applicable, and settlement timelines of by close of day for transactions settled off a distributed ledger and within 24 hours for transactions settled on a distributed ledger. The framework also introduces prudential and financial safeguards including a net equity to paid-up capital ratio of at least 75%, net liquid assets of at least 125% of average monthly operating expenses, and minimum bank guarantees of JOD 500,000 for platform operation and custody, JOD 150,000 for brokerage, and JOD 50,000 for offering providers.
The U.S. Commodity Futures Trading Commission (CFTC) has established the Innovation Advisory Committee (IAC), replacing the former Technology Advisory Committee, to advise on the impact of technological innovation in financial, derivatives, and commodity markets. The committee, sponsored by Chairman Michael S. Selig, will include diverse industry stakeholders and provide input on emerging technologies and the CFTC’s technology investment priorities.
The U.S. Commodity Futures Trading Commission (CFTC) announced the launch of the Innovation Advisory Committee (IAC), renaming the former Technology Advisory Committee, to gather expertise and recommendations on innovation in financial markets. The IAC is intended to include a balance of viewpoints across the financial industry, regulatory bodies, financial technology providers, public interest groups, academia, and market infrastructure firms. Chairman Michael S. Selig will sponsor the committee and intends to nominate CEO Innovation Council participants as charter members, while seeking additional members via public nominations. Under its charter, the IAC will advise the Commission on the impact and implications of technological innovation in financial services, derivatives, and commodity markets, including the application and utilization of new technologies, and may advise on the appropriate level of technology investment at the CFTC to support surveillance and enforcement responsibilities.
Travis Hill was sworn in as the 23rd Chairman of the Federal Deposit Insurance Corporation after serving as Acting Chairman since January 20, 2025, and Vice Chairman since January 5, 2023. Nominated by President Trump on September 30, 2025, Hill was confirmed by the Senate on December 18 for a five-year term.
The Federal Deposit Insurance Corporation (FDIC) announced that Travis Hill was sworn in as the agency’s 23rd Chairman. Hill has served as Acting Chairman of the FDIC Board since January 20, 2025, and previously as Vice Chairman since January 5, 2023. He was nominated by President Trump on September 30, 2025, for a five-year term and confirmed by the Senate on December 18, 2025.
Monetary policy developments
The latest decisions point to a broadly cautious stance, with most central banks holding rates steady: Serbia’s Executive Board maintained the reference rate at 5.75% (deposit 4.5%, lending 7.0%) as it continues to prioritise inflation control and exchange-rate stability. Poland’s MPC likewise left rates unchanged, noting December CPI eased to 2.4% y/y alongside softer activity and wage momentum. In Asia, the Bank of Korea again left the Base Rate at 2.50%, explicitly weighing a gradually moderating inflation outlook against ongoing financial-stability and FX risks. The main outlier was Angola, which delivered further easing with a 100 bp cut in its key rate to 17.5%.