In a letter to G20 finance ministers and central banks governors today, the Basel, Switzerland-based Financial Stability Board outlined its priorities for 2022. The FSB said it will be focusing on supporting financial market adjustments to a post-COVID-19 world, harnessing the benefits of digitalization and addressing financial risks from climate change.
The FSB warned that the pandemic continues to weigh on the global economy and heightened economic uncertainty and potentially lasting changes in the global economy may significantly affect interest rates and asset prices. New waves of infections have contributed to an uneven recovery across regions, higher inflation and record high debt levels globally, the FSB said.
Regarding the move to a post-pandemic environment, the FSB observed that while banks were able to absorb the macroeconomic shock of the pandemic, the non-bank financial intermediation sector experienced acute stress and needs to be strengthened.
This year, the FSB said it will also focus on crypto-assets, which it says could reach a point where they represent a threat to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system. On climate change, the FSB said its roadmap for addressing climate-related financial risks is to ensure that climate risks are properly reflected in all financial decisions.