The Financial Stability Board (FSB) today published its Progress report to the G20 on the FSB action plan to assess and address the decline in corresponding banking. The progress report is being submitted to the G20 Leaders’ Summit in Hangzhou on 4-5 September 2016, as requested by G20 Finance Ministers and Central Bank Governors in their communique following their July 2016 meeting in Chengdu.
The report describes progress in taking forward the four-point action plan published last November by the FSB:
- Further examining the dimensions and implications of the issue;
- Clarifying regulatory expectations, as a matter of priority, including more guidance by the Financial Action Task Force (FATF);
- Domestic capacity-building in jurisdictions that are home to affected respondent banks;
- Strengthening tools for due diligence by correspondent banks.
The ability to make and receive international payments via correspondent banking is vital for businesses and individuals, and for the G20’s goal of strong, sustainable, balanced growth. A decline in the number of correspondent banking relationships is a source of concern for the international community because it may affect the ability to send and receive international payments, or drive some payment flows underground, with potential consequences on growth, financial inclusion, as well as the stability and integrity of the financial system.
The FSB established in March this year a Correspondent Banking Coordination Group (CBCG) to coordinate and maintain impetus in the implementation of the action plan. The CBCG’s membership comprises senior representatives from international organisations and standard setters and national authorities in the FSB and its Regional Consultative Groups, and is chaired by Alexander Karrer, Deputy State Secretary for International Finance at the Swiss Ministry of Finance.
Correspondent Banking Progress Report