Developing financial stability policies  A key responsibility – and a starting point for much of the FSB’s work – is to identify sources of vulnerability in the global financial system and how best to reduce them. There are conjunctural as well as structural components to this assessment and, as this crisis has amply demonstrated, these components interact.
While we regularly review trends in global financial system to identify areas where risks may be building, our primary focus is the identification of structural weaknesses: market failures, such as the misalignment of incentives, collective action and coordination problems; weaknesses in market infrastructure; and information asymmetries and shortfalls. Such “fault-lines” in the fabric of the financial system highlight the need for regulation and supervision.