The regional consulting group for Americas of the Financial Stability Board (FSB) met in Nassau to discuss economic development in the regions.
The economies in the Americas have better fundamentals than at the time of the 2013, some vulnerabilities have worsened, especially the overall leverage in the economy. The underlying fragilities in the region are the increased reliance on external funding and the high levels of debt, both private and public, in an environment of global recovery, inflation returning toward targets, and financial tightening.
The regulatory treatment of sovereign exposures has also be discussed. Namely, it was discussed how to monitor the risks that sovereign exposures play in the banking system, financial markets and the broader economy. The discussion followed a of the Basel Committee (The Regulatory Treatment of Sovereign Exposures, link below).
A rather new issue is that concerning the role of FinTech and RegTech in the improvement of the effective implementation of measures related to anti-money laundering and countering the financing of terrorism. Money laundering and terrorist financing risks are a concern in certain areas of the FSB’s work, including the potential financial stability implications of crypto-assets.
The discussion took place more broadly on how crypto-assets may have an impact on the financial landscape and potential implications for financial stability (although it was recognized that their size is still small relative to the overall financial system). Members also exchanged views on other regulatory aspects involved with crypto-assets and the role of central banks and financial regulators, given the rapid growth of crypto-asset markets and the growing involvement of retail investors.