REDUCTION OF MORAL HAZARD OF SYSTEMICALLY IMPORTANT FINANCIAL INSTITUTIONS (SIFIS) ON FINANCIAL MARKETS - EFFECTIVE RESOLUTION FSB

Scientific review article
Autor: Dragan Momirović PhD

Summary: The Report of the Financial Stability Board (FSB), of October 2010, entitled “Reducing moral hazard caused by systemically important financial institutions”, was endorsed at the G20 Summit in Seoul, held in November 2011. G20 endorsed the policy framework and the timeline and processes proposed by the FSB. The proposed framework contains additional improvement measures and guidelines for the efficient resolution of financial distress of problematic systemically important financial institutions (SIFIs). Suggestions and ideas are outlined in the FSB Consultative Document of 19 July 2011, entitled “The Key Attributes of Effective Resolution Regimes for Financial Institutions”. The proposed solutions with questions were forwarded to all the relevant institutions, with the deadline for submitting comments and proposals by 2 September 2011. Proposed improvements and suggestions were submitted to the FSB for further consideration, some of which being constructive and enhanced solutions were built into the final document entitled “Key Attributes of Effective Resolution Regimes for Financial Institutions”, adopted at the G20 Summit in Cannes, on 4 December 2011. The final document provides an international standard for the resolution in an amicable and efficient manner of the unstable SIFIs, including responsibility, instruments, powers of the national resolution regimes, manner of resolvability assessment, recovery planning, and specific cross-border agreements.

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