In remarks at the Bank of Spain and CEMFI Fifth Conference on Financial Stability in Madrid, Financial Stability Board (FSB) Chair Klaas Knot reviewed recent episodes of market stress and set out remaining priorities for safeguarding financial stability, with a particular focus on non-bank financial intermediation (NBFI), unfinished banking reforms, and fast-moving technology-driven risks. He noted the comments were made in his role as Chair and do not necessarily reflect the views of the FSB or its members. Knot argued that NBFI has repeatedly amplified shocks and remains vulnerable to liquidity mismatches, leverage and growing interconnectedness with banks, while systemic-risk oversight is constrained by opacity and data gaps. He pointed to FSB work on money market fund resilience, structural liquidity mismatch in open-ended funds and margining liquidity preparedness, and said policy recommendations to the G20 on financial stability risks from leverage in NBFI would be delivered later this month, stressing that recommendations only reduce risk once implemented and operationalised by national authorities. On banking, he cited the failure of Credit Suisse and three US regional banks as evidence that bank failures remain a live issue, highlighted that final Basel III standards are still not implemented in many jurisdictions, and drew a distinction between simplification and deregulation, warning against lowering buffers through relaxed rules. He also flagged rising technology and payments risks including cyber threats, concentration in key service providers and accelerating crisis dynamics, and said crypto-assets have not yet posed systemic risk but may be nearing a tipping point as retail access expands through crypto ETFs and interlinkages with traditional finance deepen, including stablecoin issuers holding substantial amounts of US Treasuries. Next steps flagged in the remarks include the planned delivery of the NBFI leverage recommendations to the G20 later this month, ongoing FSB work via a high-level group to explore closing NBFI data gaps, and development of a strategy for the next phase of the G20 Roadmap for Enhancing Cross-Border Payments.
Financial Stability Board 2025-06-12
Financial Stability Board Chair signals forthcoming G20 recommendations on leverage in non-bank finance and warns against deregulation
Financial Stability Board Chair Klaas Knot, at a Madrid conference, highlighted vulnerabilities in non-bank financial intermediation (NBFI), unfinished banking reforms, and technology-driven risks. He emphasized systemic-risk oversight, citing liquidity mismatches and leverage in NBFI, and noted upcoming G20 policy recommendations. Knot warned of rising technology and payments risks, including cyber threats and crypto-assets nearing a systemic risk tipping point.