The Financial Stability Board has proposed eight high-level principles to guide financial authorities in making regulatory and supervisory frameworks more effective, efficient, risk focused, coherent and forward looking. The principles frame modernisation as an ongoing process that should preserve or enhance financial system resilience, remain consistent with internationally agreed standards and accommodate jurisdictions’ legal frameworks and circumstances. The proposals call on authorities to apply proportionality and tailoring, prioritise material and emerging risks, streamline supervision and adopt technology with appropriate governance and human oversight. They also cover clearer and more adaptive regulation, domestic coordination, transparent policymaking supported by impact analysis, and proportionate reporting and disclosure requirements that minimise duplication. The consultation draws on 126 modernisation initiatives reported by 24 jurisdictions and three standard-setting bodies, and seeks views on issues including cliff effects from tailoring, cumulative policy impacts and the trade-off between proportionality and administrative simplicity. The FSB plans to finalise the principles following consultation. If finalised, FSB member financial authorities would commit to implement them, with discretion over how they apply the framework domestically.
Financial Stability Board launches consultation on eight principles for regulatory and supervisory modernisation
The Financial Stability Board has proposed eight principles for modernising regulatory and supervisory frameworks while preserving or enhancing financial system resilience. They address ongoing review, proportionality, material risks, effective supervision and regulation, domestic coherence, impact analysis and streamlined reporting. The FSB plans to finalise the framework following consultation.