Such a perspective is key to understanding and tackling risks from digital innovation and climate change, which affect all parts of the financial system, as well as understanding system-wide risk in complex financial ecosystems like NBFI. It is also key to avoid regulatory arbitrage and fragmentation. And its broad membership, including the sectoral standard setters, puts the FSB in a position to coordinate effectively.
The second strength is the FSB’s agility in addressing near-term threats as well as structural changes in the financial system, while keeping sufficient headroom to be able to respond to new emerging vulnerabilities that are detected.