Quarles: Basel Examining Post-Crisis Rules, New Vulnerabilities

With “nearly all” the post-financial crisis policy changes completed, the Financial Stability Board is looking to new vulnerabilities to the global financial system, FSB Chairman Randal Quarles said yesterday in Hong Kong. “We cannot be complacent and assume that we are safe from all shocks,” he said. “As a result, the FSB has decided to undertake a review of its framework for assessing vulnerabilities to ensure that we are at the cutting edge of financial stability vulnerability assessment.”

Quarles — who is vice chairman for supervision at the Federal Reserve and last year became chairman of the Basel, Switzerland-based FSB — also said the FSB will continue evaluating the full set of post-crisis reforms to ensure they are effective and efficient. “If reforms are unnecessarily burdensome and we can achieve strong resiliency more efficiently and simply, we should be able to boost sustainable financial and economic activity, thus benefiting everyone,” he said.

Quarles said that the FSB has completed evaluations of the effects of post-crisis reforms on infrastructure finance and derivative contract clearing and that it expects to seek public feedback this summer on its review of reforms’ effects on small and midsize business financing. “And we are in the process of launching an important study on the effects of reforms aimed at ending too big to fail,” he added.