Asian members of the Group of 20 major economies have not introduced laws to prevent another “too big to fail” financial crisis, the world’s top financial watchdog warned on Friday.
The Financial Stability Board (FSB) on Friday published its Second Thematic Review on Resolution Regimes. The report is part of series that show how countries are implementing the Key Attributes of Effective Resolution Regions for Financial Institutions. In short, the Key Attributes show how G20 countries are supposed to implemented rules to avoid a repeat the government bailouts of lenders that happened in the wake of the 2008 fiscal crisis.
The FSB, which can “name and shame” those which do not yet comply with its rules, said member countries that do not yet have these laws include China, Chinese territory Hong Kong, India, Indonesia, and Korea. But Asian members are not alone. Other countries that have not complied include Argentina, Australia, Brazil, Canada, Mexico, Russia and Saudi Arabia.
Membership in the G20 includes a commitment to implement the rules it has agreed to. And the FSB has the responsibility to make sure they follow the rules.
“Only the European Union member states, Switzerland and the United States are currently able to achieve a creditor-financed resolution to support continuity of critical functions,” the report said.
“Substantial work remains to put in place a full set of resolution powers and recovery and resolution planning requirements,” Fernando Restoy, Deputy Governor of the Bank of Spain and chair of the team who carried out the review told Reuters.
The task force said countries need to clarify by December what actions they have taken or intend to take.