IMF Membership in the Financial Stability Board
March 22, 2013
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March 22, 2013
On March 15, 2013 the Executive Board of the International Monetary Fund (IMF) approved the IMF’s acceptance of membership in the Financial Stability Board as an association under Swiss law.
The FSB was formed in April 2009 in the wake of the financial crisis to strengthen international cooperation in the area of financial regulation. Since its creation, the FSB has relied on a relatively informal institutional framework. Given the growing importance of the FSB and its work, the G-20 leaders agreed to strengthen the FSB’s capacity, resources, and governance, including establishing the FSB on an enduring organizational footing as an association under Swiss law. On January 28, 2013, the FSB was formally established as a Swiss association.
The IMF formally accepted membership in the FSB in September 2010 and has participated actively in the work of the FSB. The FSB has invited all of its members to join the new association. Against this background, the Executive Board agreed to accept membership in the FSB as an association, given the benefits that this would continue to provide to the Fund and its own membership and that the Fund would continue to participate in accordance with its own legal framework and policies.
Executive Board Assessment
Executive Directors welcomed the proposal for IMF membership in the new FSB as an association established under Swiss law. They noted that, since acceptance of membership in the FSB in September 2010, the IMF has been participating actively in the work of the FSB on a wide range of financial sector issues. Its involvement as a member of the FSB has helped identify important synergies and ensure an effective division of labor, given the common areas of interest and complementarities in responsibilities.
Directors noted that collaboration between the IMF and the FSB would continue to be guided by each institution’s mandate, with the IMF taking the lead on surveillance of the global financial system, and the FSB on regulatory and supervisory matters. They welcomed ongoing IMF staff involvement in FSB work on resolution regimes and data initiatives. Directors emphasized that, in areas of potential overlaps where scope for improved coordination exists, a clear delineation of responsibilities would help exploit synergies and comparative expertise, particularly in the joint Early Warning Exercise. In light of the evolution of the FSB, a few Directors saw merit in revisiting the joint letter signed by management of the IMF and the Financial Stability Forum in November 2008.
Directors agreed that membership in the Association would be the most effective mechanism for continued close cooperation between the IMF and the FSB. They considered that membership in the Association will allow the IMF to represent its interests and those of its broader membership by participating fully in the FSB’s governance structure, and to continue to build on its already effective relationship with the FSB. Directors noted that the IMF’s participation in the FSB as a member will not compromise the IMF’s independence, and that the IMF will continue to be protected by its own privileges and immunities under Swiss law. They also noted that the acceptance of membership in the Association will not create specific legal obligations for the IMF, although members must, of course, act in good faith in their dealings with the Association.
In approving the IMF’s acceptance of membership in the FSB, Directors underscored that (i) the IMF will participate in the Association in accordance with the IMF’s legal framework and policies, (ii) the IMF will reserve the right not to take part in, or be bound by, the decision-making of the Association on policy-making and related activities where such participation would not be consistent with the IMF’s legal or policy framework, and (iii) if the Association reaches a decision on a policy-related matter, the IMF will only be prepared to support that decision to the extent that it is consistent with the IMF’s legal and policy framework.
Directors concurred that management should continue to guide IMF participation in the FSB’s activities. They looked forward to regular reporting on the IMF’s work in the FSB, as well as, where appropriate, prior consultations with Executive Directors on issues that are central to the IMF.