Summary

  • The FSB proposes eight high-level principles for authorities reviewing financial regulation and supervision, with an explicit aim to preserve or enhance existing resilience.
  • The consultation leaves implementation to national authorities and asks how evidence, impact analysis and proportionality can make that discretion accountable; comments are due 8 January 2027.

A resilience condition inside a modernisation agenda

On 14 October, the Financial Stability Board published Regulatory and Supervisory Modernisation Principles: Consultation report. The proposal responds to a request from the US G20 Presidency and seeks to align reviews already underway in member jurisdictions. It is separate from the FSB’s same-day report on how G20 reforms are implemented.

The eight principles cover continuous review, proportionality, material risks, supervision, forward-looking regulation, coherence across domestic frameworks, policymaking transparency and information reporting. The report does not frame modernisation as a choice between growth and stability. Its preamble says financial stability supports sustainable growth, which in turn supports stability. It also anchors the principles in internationally agreed standards, national legal frameworks and a commitment to preserve or enhance current resilience.

That last condition is the safeguard readers should follow. The principles are deliberately high-level: the FSB says authorities would have discretion over implementation. If finalised, they would commit to implement them, but could do so in different ways. The FSB Charter also says its decisions do not bind national authorities or create legal rights and obligations. The consultation is therefore shaping a common reference point, not imposing a single rulebook.

The FSB says 24 jurisdictions and three standard-setting bodies reported 126 modernisation efforts for its stocktake. Those examples give the discussion breadth, but the report does not turn them into a global causal estimate of what works. The consultation asks what evidence or case studies would help assess benefits and risks, and whether the principles adequately protect resilience.

The most operational questions concern the space between tailoring and consistency. The FSB asks how authorities can adapt requirements to an institution’s size, complexity, business model and risk profile without making frameworks harder to administer. It asks how to prevent “cliff effects” when requirements change abruptly as a firm crosses a threshold. It also asks how impact analysis should disclose assumptions, data limits and effects that are difficult to quantify, including cumulative effects across policies.

The draft does not prescribe one resilience metric or one impact-analysis template for every jurisdiction. That is an inference from its high-level language and the open questions, not a stated finding by the FSB. The result is a consultation about how the promise should be tested: what counts as material risk, how a tailored rule should be justified, and what evidence would reveal that a simplification has shifted risk elsewhere.

Comments are due by 8 January 2027, and the FSB plans to finalise the report after the consultation. The next evidence will be the final wording and the case studies that respondents ask the Board to include. A resilience condition has little practical force if authorities cannot explain how they applied it; a single rigid test could also miss differences in national law and market structure. The consultation asks respondents to show how to keep both risks visible.

Sources: FSB consultation report; full report (PDF); FSB consultation announcement.