The Financial Stability Board (FSB) advises world leaders on tax policy and aims to aid financial stability in member countries and the wider world. It creates voluntary standards for financial institutions and analyzes and reports on financial risks. The FSB works with international organizations to prevent or minimize harm from crises. Its predecessor, the Financial Stability Forum, focused on domestic and global financial issues. The FSB has a broader scope and aims to coordinate efforts more effectively.
The Financial Stability Board (FSB), is a cooperative institution created to advise world leaders on tax policy. A successor to an earlier organisation, the Financial Stability Forum (FSF), the FSB was created in 2009 following a call from G20 leaders to broaden the forum’s scope for greater efficiency. While there are many important services that the FSB is intended to provide, its greater mandate is to aid financial stability in all member countries and in the wider world.
The original Financial Stability Forum created a discussion and advisory group focused on domestic and global financial issues. The FSF brought together heads of national and central banks, international market analysts and other financial professionals and advisers with a significant perspective on international financial stability. Through committees and reports, the FSF has sought to improve communication, cooperation and standards in the financial world. The 2009 move to the Financial Stability Board attempted to broaden its focus, bringing together finance ministries and professionals representing more than 20 countries, along with several international and multinational financial institutions.
One of the Financial Stability Board’s primary goals is to create voluntary standards of safety and practice for financial institutions around the world. These standards are developed as a result of research, studies and analyzes performed by FSB members. By creating these standards, the general hope is that nations will be less vulnerable to some types of economic crashes, such as those created by economic bubbles.
Another key goal of the FSB is to analyze and report on financial risks or risks in other business segments that could significantly harm the global economy. In addition to assessing risks, committees and councils work to present possible action plans to leaders in order to prevent risks from realizing, or at least minimize harm. In this mandate, the Financial Stability Board works with international organizations, such as the International Monetary Fund (IMF) and the World Bank, to create indicators and early warning systems for various possible crises.
A stable financial system is critical to the health of the national and global economy. The Financial Stability Board, while having no direct power, has a huge opportunity to influence or at least educate world leaders on safe and efficient regulatory policy that can prevent financial devastation. With a much broader scope than its predecessor, the FSF, the Financial Stability Board may be able to coordinate efforts on a broader and more effective basis than ever before.
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