This is the accessible text file for GAO report number GAO-14-261 
entitled 'International Financial Reforms: U.S. and Other 
Jurisdictions' Efforts to Develop and Implement Reforms' which was 
released on April 3, 2014. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 
GAO: 

Report to Congressional Addressees: 

April 2014: 

International Financial Reforms: 

U.S. and Other Jurisdictions' Efforts to Develop and Implement Reforms: 

GAO-14-261: 

GAO Highlights: 

Highlights of GAO-14-261, a report to congressional addressees. 

Why GAO Did This Study: 

Cross-border interconnections in the financial markets and other 
factors helped spread disruptions during the 2007-2009 financial 
crisis and increased systemic risk. In response to the crisis, the G20 
positioned itself as the main international forum for reforming 
financial regulations. In 2008, the G20 leaders committed to implement 
a broad range of reforms designed to strengthen financial markets and 
regulatory regimes. 

In light of the G20's reform efforts and the potential implications of 
the reforms for the United States, GAO examined (1) the U.S. role in 
the international financial reform efforts and (2) the implementation 
status of recent international financial reforms in the United States 
relative to other countries and challenges that uneven implementation 
may present. To address these issues, GAO reviewed and analyzed 
reports or other documents issued by the G20, FSB, IMF, and other 
international bodies since 2008 and studies on the G20 reforms by 
academics, industry associations, and others. GAO reviewed the 
accuracy of U.S. responses to select questionnaires administered by 
FSB and asked other countries' national audit offices to do the same 
for their regulators' responses. Finally, GAO interviewed officials 
representing U.S. agencies, FSB Secretariat, IMF, industry 
associations, and academics. 

What GAO Found: 

The United States has played an active role in helping to reform 
financial regulations to address weaknesses revealed by the 2007-2009 
financial crisis. According to Treasury officials, during the acute 
phase of the crisis, the United States proposed elevating the Group of 
Twenty (G20) forum—-representing 19 countries (including the United 
States) and the European Union-—from the level of finance ministers 
and central banks to the level of heads of state or government. In 
2008, the U.S. President and other G20 leaders held their first summit 
in Washington, D.C., in part to establish a framework to help prevent 
financial crises. The G20 leaders established principles for financial 
regulatory reform and agreed on a series of financial reforms, which 
they have revised or expanded at subsequent summits. To implement 
their reforms, the G20 leaders generally have called on their national 
authorities—finance ministries, central banks, and regulators—and 
international bodies, including the Financial Stability Board (FSB) 
and standard setting bodies, such as the Basel Committee on Banking 
Supervision. In 2009, the G20 leaders established FSB to coordinate 
and promote implementation of the financial reforms, which typically 
involves standard setting bodies developing international standards 
(e.g., principles, policies, or guidance) and then jurisdictions 
voluntarily adopting rules or policies consistent with these 
standards, such as through legislation or regulations. As members of 
FSB and international standard setting bodies, U.S. federal 
authorities have actively helped formulate the standards that 
implement the G20 reforms and cover, among other things, banking, 
derivatives, and hedge funds. 

The United States and other jurisdictions have made progress 
implementing many of the G20 financial reform commitments, but most 
reforms have not been fully implemented by all jurisdictions. FSB and 
standard setting bodies collaboratively monitor and report on the 
implementation status of the G20 reforms. According to recent progress 
reports, the United States, like most FSB members, has implemented or 
is implementing G20 reforms that FSB designated as a priority based on 
their importance to global financial stability-—including higher 
capital standards, derivatives reforms, compensation practices, policy 
measures for systemically important financial institutions, and 
regimes for resolving failing financial institutions. However, 
implementation varies among jurisdictions. For example, according to a 
September 2013 progress report, only the United States reported having 
rules at least partly in effect to implement the G20 reforms requiring 
derivatives to be centrally cleared, traded on organized trading 
platforms, and reported to trade repositories, while many other 
jurisdictions reported having rules in effect for only some of these 
reforms or adopted or proposed legislation to implement the reforms. 
To promote and monitor the adoption of the international standards by 
each jurisdiction, such as to ensure a level playing field, FSB, the 
International Monetary Fund (IMF), and the Basel Committee have 
established programs to review and assess their members' 
implementation of the standards. At the same time, legal, economic, 
and political factors can create implementation challenges for 
jurisdictions. For example, regulators in different jurisdictions may 
apply or interpret the standards differently. However, in some cases, 
inconsistent implementation of international financial standards could 
lead to certain activities migrating to less regulated jurisdictions 
(regulatory arbitrage) or adversely affect financial stability. 

What GAO Recommends: 

GAO is not making any recommendations in this report. 

View [hyperlink, http://www.gao.gov/products/GAO-14-261]. For more 
information, contact A. Nicole Clowers at (202) 512-8678 or 
clowersa@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

United States Has Played an Active Role in International Financial 
Regulatory Reforms but Has Faced Challenges: 

United States and Other Jurisdictions Report Having Made Progress 
Implementing International Reforms, but Most Reforms Have Not Been 
Fully Implemented: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: The International Financial Architecture and 
International Bodies: 

Appendix III: Reform Areas and Objectives of the Group of Twenty, 
Standards Developed by International Bodies, and U.S. Agencies' 
Participation: 

Appendix IV: Implementation Status of the Group of Twenty's Reform 
Commitments Reported by Select Member Jurisdictions of the Financial 
Stability Board: 

Appendix V: Comments from the Department of the Treasury: 

Appendix VI: Comments from the Securities and Exchange Commission: 

Appendix VII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Key Reform Areas Addressed by G20 Leaders: 

Table 2: Implementation Status of Basel Capital Framework as Reported 
by Members of the Basel Committee, as of October 2013: 

Table 3: Implementation Status of the G20 OTC Derivatives Reforms as 
Reported by FSB Member Jurisdictions, as of September 2013: 

Table 4: Select Features of Sector-Specific Regimes as Reported by FSB 
Member Jurisdictions, as of April 2013: 

Table 5: G-SIBs as of November 2013, Required Level of Additional Loss 
Absorbency, and Home Country: 

Table 6: Implementation Status of the G20 Financial Reform Commitments 
in the Nonpriority Areas as Reported by the United States and Other 
FSB Member Jurisdictions, as of August 2013: 

Table 7: G20 Reform Objectives, Selected International Standards, and 
U.S. Participation: 

Figures: 

Figure 1: Selected International Bodies Comprising the International 
Financial Architecture, as of January 2014: 

Figure 2: The G20-Initiated International Financial Reform Process: 

Figure 3: U.S. Federal Agencies' Membership in Selected International 
Bodies: 

Figure 4: International Bodies Included in the International Financial 
Architecture: 

Figure 5: Country Profiles-China: 

Figure 6: Country Profiles-France: 

Figure 7: Country Profiles-Germany: 

Figure 8: Country Profiles-Italy: 

Figure 9: Country Profiles-Japan: 

Figure 10: Country Profiles-Netherlands: 

Figure 11: Country Profiles-Spain: 

Figure 12: Country Profiles-Sweden: 

Figure 13: Country Profiles-Switzerland: 

Figure 14: Country Profiles-United Kingdom (UK): 

Figure 15: Country Profiles-United States (US): 

Abbreviations: 

Basel Committee: Basel Committee on Banking Supervision: 

CFTC: Commodity Futures Trading Commission: 

CPSS: Committee on Payment and Settlement Systems: 

Dodd-Frank Act: Dodd-Frank Wall Street Reform and Consumer Protection 
Act: 

D-SIB: domestic systemically important bank: 

FDIC: Federal Deposit Insurance Corporation: 

Federal Reserve: Board of Governors of the Federal Reserve System: 

FSAP: Financial Sector Assessment Program: 

FSB: Financial Stability Board: 

FSOC: Financial Stability Oversight Council: 

GDP: gross domestic product: 

G-SIB: global systemically important bank: 

G20: Group of Twenty: 

IADI: International Association of Deposit Insurers: 

IMF: International Monetary Fund: 

IAIS: International Association of Insurance Supervisors: 

IASB: International Accounting Standards Board: 

IFRS: International Financial Reporting Standards: 

IOSCO: International Organization of Securities Commissions: 

NAIC: National Association of Insurance Commissioners: 

OCC: Office of the Comptroller of the Currency: 

ODRG: OTC Derivatives Regulators Group: 

OECD: Organisation for Economic Co-operation and Development: 

OLA: Orderly Liquidation Authority: 

OTC: over-the-counter: 

ROSC: Reports on the Observance of Standards and Codes: 

SEC: Securities and Exchange Commission: 

SIFI: systemically important financial institution: 

Treasury: Department of the Treasury: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

April 3, 2014: 

The Honorable Maxine Waters: 
Ranking Member: 
Committee on Financial Services: 
House of Representatives: 

The Honorable Shelley Moore Capito: 
Chairwoman: 
Subcommittee on Financial Institutions and Consumer Credit: 
Committee on Financial Services: 
House of Representatives: 

Cross-border interconnections in the financial markets and other 
factors helped spread disruptions in the global financial system 
during the 2007-2009 financial crisis and increased systemic risk at 
the national and international levels. For example, the rise in the 
complexity and globalization of over-the-counter (OTC) derivatives 
contributed to economic growth but created interconnections that 
helped spread disruptions quickly across markets and borders during 
the crisis. These and other disruptions contributed to widespread 
losses in economic output and wealth across the globe. In the United 
States, the 2007-2009 financial crisis was associated with large 
declines in economic output, household wealth, and other economic 
indicators.[Footnote 1] In response to the financial crisis, the 
United States and other countries undertook a variety of initiatives 
to stabilize and reform their financial systems. For example, in the 
United States, Congress passed the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Dodd-Frank Act), which includes a broad range 
of reforms intended to strengthen oversight of the financial services 
sector.[Footnote 2] 

At the international level, the U.S. President and leaders from other 
major jurisdictions positioned the Group of Twenty (G20) as the main 
international forum for reforming financial regulations.[Footnote 3] 
In 2008, the G20 leaders held their first summit in Washington, D.C., 
and collectively committed to implement reforms designed to strengthen 
financial markets and regulatory regimes to avoid future financial 
crises. In doing so, the leaders acknowledged that regulation is first 
and foremost the responsibility of national regulators. But they also 
noted that the financial markets are global; thus, intensifying 
international cooperation, strengthening international standards, and 
implementing such standards consistently are necessary to help protect 
against adverse cross-border, regional, and global developments 
affecting international financial stability. Since 2008, the G20 
leaders have met at least annually, in part to monitor progress and 
refine and expand their financial reform agenda. They generally have 
tasked their finance ministers and international bodies with 
implementing the agenda. In particular, the G20 leaders established 
the Financial Stability Board (FSB) as the successor to the Financial 
Stability Forum and made FSB responsible for coordinating and 
promoting the implementation of the G20 reform commitments.[Footnote 4] 

We prepared this report under the authority of the Comptroller General 
to conduct work on GAO's initiative to assist Congress with its 
oversight responsibilities. In light of the G20's efforts to reform 
financial regulations and the potential implications of such reforms 
for the United States, we examined the: 

* U.S. role in the international financial reform efforts, including 
the development of international financial standards, and: 

* implementation status of recent international financial reforms in 
the United States relative to other jurisdictions and challenges that 
any uneven progress may present. 

To address our objectives, we reviewed and analyzed declarations, 
surveys, and reports issued by the G20, FSB, International Monetary 
Fund (IMF), and other international bodies since 2008. We also 
reviewed and analyzed studies on the G20 reforms by academics, 
industry associations, and others. We reviewed the accuracy of U.S. 
responses to selected questionnaires administered by FSB or a standard-
setting body and asked other countries' national audit offices to do 
the same for their regulators' responses. Finally, we interviewed 
officials representing U.S. authorities--the Board of Governors of the 
Federal Reserve System (Federal Reserve), Commodity Futures Trading 
Commission (CFTC), Department of the Treasury (Treasury), Federal 
Deposit Insurance Corporation (FDIC), Office of the Comptroller of the 
Currency (OCC), and Securities and Exchange Commission (SEC)--FSB 
Secretariat, IMF, industry associations, and academics. Appendix I 
contains additional information on our scope and methodology. 

We conducted this performance audit from March 2013 to April 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

The International Financial Architecture: 

Numerous international bodies with different missions and members have 
played a role in implementing the G20 financial regulatory reform 
agenda. In general, many of these bodies operate on a consensus basis 
and have no legally binding authority. Thus, financial reform 
agreements reached by these bodies must be adopted voluntarily by 
their member jurisdictions, such as through legislative or regulatory 
changes (or both), to take effect. Figure 1 depicts some of the 
international bodies involved in the G20 financial regulatory reforms 
and that partly comprise an international network often referred to as 
the "international financial architecture."[Footnote 5] 

Figure 1: Selected International Bodies Comprising the International 
Financial Architecture, as of January 2014: 

[Refer to PDF for image: illustration] 

Standard-setting bodies (SSBs): 

Basel Committee on Banking Supervision (Basel Committee) Banking[A]: 
Develop: 
* Capital, liquidity and leverage standards (Basel 2, 2.5, 3); 
* Framework for global systemically important banks (G-SIBs) (with 
FSB); 
* Margin requirements for non-centrally	cleared derivatives (with 
IOSCO); 
* Core Principles for Banking Supervision; 
Monitor compliance with Basel standards. 

International Organization of Securities Commissions (IOSCO) 
Securities[A]: 
* Develop, implement, and promote adherence to standards of 
regulation, oversight, and enforcement; 
* Enhance investor protection and promote confidence in securities 
markets integrity; 
* Exchange information to develop markets, strengthen infrastructure, 
and implement appropriate regulation. 

International Association of Insurance Supervisors (IAIS) Insurance[A]: 
Develop: 
* Framework for global systemically important insurance companies (G-
SIIs); 
* Insurance Core Principles. 

International Accounting Standards Board (IASB) Accounting: 
* Develop a single set of high quality, understandable, enforceable, 
and globally accepted accounting standards. 

International Association of Deposit Insurers (IADI) Deposit Insurance: 
* Develop principles for strengthening national deposit insurance 
arrangements. 

Committee on Payment and Settlement Systems (CPSS) Payment and 
Settlement: 
* Develop principles for financial market infrastructures (with IOSCO); 
* Monitor financial market infrastructures (with IOSCO). 

[A] Founding/parent members of Joint Forum, which coordinates on issues 
of common concern. 

Standard-setting bodies (SSBs): 
Reports on progress of implementation to: Group of Twenty (G20) Major 
Global Economies; 
Recommend standards to Group of Twenty (G20) Major Global Economies. 

Group of Twenty (G20) Major Global Economies: 
* Identify and commit to key financial reform areas; 
* Delegate reform standards development and implementation monitoring 
to other international organizations; 
* Endorse standards developed by international organizations; 
Tasks to: Standard-setting bodies (SSBs) 

Financial Stability Board (FSB) Coordinator for International 
Financial Reforms: 
* Develop standards on resolution regimes, compensation; 
* Identify global systemically important financial institutions (with 
Basel Committee, IAIS, IOSCO); 
* Monitor reform implementation across members; 
Reports to: Group of Twenty (G20) Major Global Economies; 
Recommend standards to: Group of Twenty (G20) Major Global Economies; 
Coordinates with Standard-setting bodies (SSBs); 
Tasks to: International Monetary Fund (IMF) Global Financial Sector 
Institution. 

International Monetary Fund (IMF) Global Financial Sector Institution: 
* Work with FSB and others on standards development issues; 
* Review and assessment of financial sectors (e.g., through Article IV 
surveillance, mandatory financial stability assessments, Financial 
Sector Assessment Program); 
* Conducts early warning exercises jointly with FSB. 

Source: GAO, based on international organization websites and U.S. 
federal agencies. 

Note: This figure is not meant to be comprehensive but shows certain 
relationships and activities of selected international bodies involved 
in carrying out the reform agenda the G20 initiated in 2008. 

[End of figure] 

G20: 

Within the international financial architecture, the G20 is a forum 
for international cooperation on global economic and financial issues. 
Its members include 19 countries and the European Union. The G20's 
objectives are to coordinate policy among its members to achieve 
global economic stability and sustainable growth; promote financial 
regulations that reduce risks and prevent future financial crises; and 
modernize the international financial architecture. The G20 was 
established in 1999 as a forum for finance ministers and central bank 
governors in the aftermath of the financial crisis of 1997-1998. The 
G20 was elevated to the political leader level in 2008, when its 
member countries' heads of state or government first met to respond to 
the global economic and financial crisis.[Footnote 6] G20 member 
jurisdictions account for approximately 90 percent of world gross 
domestic product, 80 percent of world trade, and are home to two-
thirds of the world's population. Since 2008, the G20 leaders have met 
at least annually. The presidency of the G20 rotates annually among 
its members, and the host government supplies the staff for the 
secretariat that runs the agenda and hosts meetings that year. In 
addition to the G20 leaders meetings, the G20 finance ministers and 
central bankers, and the Sherpas, who are representatives of the 
leaders, meet on a regular basis. As the G20 operates on the basis of 
consensus, its commitments reflect the agreement of its members, 
including the United States. 

FSB: 

The G20 established FSB in 2009 as the successor to the Financial 
Stability Forum to coordinate at the international level the work of 
national financial authorities and international standard-setting 
bodies in order to develop and promote the implementation of effective 
regulatory, supervisory, and other financial sector policies. FSB 
member institutions include finance ministries, financial regulatory 
authorities, and central banks of the G20 members, as well as those of 
Hong Kong Special Administrative Region (SAR), the Netherlands, 
Singapore, Spain, and Switzerland. FSB members also include 
international bodies--such as IMF, the Organisation for Economic Co-
operation and Development, and the World Bank--and international 
standard-setting bodies, such as the Basel Committee on Banking 
Supervision (Basel Committee), International Accounting Standards 
Board (IASB), International Organization of Securities Commissions 
(IOSCO), and International Association of Insurance Supervisors (IAIS). 

According to FSB, it seeks to support the multilateral agenda for 
strengthening financial systems and the stability of international 
financial markets. FSB's mandate includes (1) assessing 
vulnerabilities affecting the global financial system and identifying 
and overseeing actions needed to address them; (2) promoting 
coordination and information exchange among authorities responsible 
for financial stability; (3) undertaking reviews of the policy 
development work of the international standard-setting bodies to 
ensure their work is timely, coordinated, focused on priorities, and 
addressing gaps; and (4) collaborating with IMF to conduct early 
warning exercises. In addition, FSB has instituted a framework for 
monitoring implementation of the G20 financial reforms and reports 
periodically to the G20 about standards development and implementation 
progress. 

Organizationally, a 70-person Plenary, composed of one to three 
representatives from each represented jurisdiction or organization, is 
the sole decision-making body of FSB. The Plenary approves reports, 
principles, standards, recommendations, and guidance developed by FSB, 
and approves work programs and the FSB budget. The FSB Plenary is led 
by the FSB Chairman. A Steering Committee coordinates work in between 
Plenary meetings. FSB's work is carried out through the activities of 
standing committees, including the Standing Committee on Assessment of 
Vulnerabilities, the Standing Committee on Standards Implementation, 
and the Standing Committee on Supervisory and Regulatory 
Cooperation.[Footnote 7] The FSB Plenary is reviewing the structure of 
representation in FSB, which is to be completed by the next leaders 
summit in November 2014.[Footnote 8] As outlined in the FSB charter, 
FSB Plenary seat assignments are meant to reflect the size of the 
national economy, financial market activity, and national financial 
stability arrangements in a member jurisdiction. The staff of FSB 
members carry out the majority of FSB's work. The FSB Secretariat has 
approximately 30 staff members who also support FSB's work. 

IMF: 

IMF is an organization of 188 member jurisdictions. Founded in 1944, 
IMF's primary purpose is to safeguard the stability of the 
international monetary system--the system of exchange rates and 
international payments that enables countries (and their citizens) to 
buy goods and services from one another. IMF's main activities include 
(1) providing advice to members on adopting policies that can help 
them prevent or resolve a financial crisis, achieve macroeconomic 
stability, accelerate economic growth, and alleviate poverty; (2) 
making financing temporarily available to members to help them address 
balance of payments problems; and (3) offering technical assistance 
and training to countries, at their request, to help them build the 
expertise and institutions they need to implement sound economic 
policies. 

As part of its surveillance activities, IMF conducts surveillance of 
its members' financial sectors at the bilateral and multilateral 
levels and research and analysis of macroeconomic and financial 
issues. A comprehensive and in-depth review of individual members' and 
jurisdictions' financial sectors is undertaken by the mandatory 
financial stability assessments (mandatory FSAs) or the Financial 
Sector Assessment Program (FSAP), while Article IV staff reports (and 
associated selected issue papers) cover financial sector issues at a 
higher frequency and often follow-up on mandatory FSA or FSAP 
recommendations. IMF's multilateral surveillance appears in the form 
of regular reports, such as the Global Financial Stability Report, 
World Economic Outlook, Fiscal Monitor, and Spillover 
reports.[Footnote 9] In recent years, IMF has worked with FSB and 
international standard-setting bodies to develop standards and 
guidance, to the extent those activities are consistent with its 
mandate. In addition to these activities, the G20 has tasked IMF and 
FSB with the responsibility for conducting early warning exercises, 
which typically take place twice a year, to assess risks to global 
financial stability. 

Basel Committee: 

The Basel Committee is the primary global standard-setter for the 
prudential regulation of banks and provides a forum for cooperation on 
banking supervisory matters. Established in 1975, it sets supervisory 
standards and guidelines to promote global financial stability. The 
standards have no legal force but are developed and issued by Basel 
Committee members, with the expectation that individual national 
authorities will implement them.[Footnote 10] The Basel Committee 
members include central banks or bank supervisors for 27 
jurisdictions.[Footnote 11] The Basel Committee expanded its 
membership in 2009, adding the financial authorities of Argentina, 
Hong Kong SAR, Indonesia, Saudi Arabia, Singapore, South Africa, and 
Turkey to its membership. With the G20's support, the Basel Committee 
recently established a more active program to monitor members' 
commitments to implement Basel Committee standards. The Basel 
Committee works with FSB, of which it is a member, and other 
international standard-setting bodies to address financial reform 
issues within its mandate. The Basel Committee is a sponsor 
organization of the Joint Forum, which also includes IOSCO and IAIS, 
and which coordinates work on issues of common concern. 

IOSCO: 

IOSCO sets global standards for the securities sector to protect 
investors, ensure efficient markets, and address systemic risks. Its 
members include more than 120 securities regulators. It also has 
affiliated members, including 80 other securities markets participants 
(such as stock exchanges). Established in 1983, IOSCO develops, 
implements, and promotes adherence to internationally recognized 
standards for securities regulation. It works with the G20 and FSB to 
develop standards and guidance to implement the global regulatory 
reforms that apply to securities markets and institutions. IOSCO is a 
founder of the Joint Forum, along with the Basel Committee and IAIS. 
IOSCO also works with the Committee on Payment and Settlement Systems 
(CPSS) on reform efforts related to financial market infrastructures, 
including central clearing counterparties. 

IAIS: 

IAIS is the international standard-setting body responsible for 
developing and assisting in the implementation of principles, 
standards, and other supporting material for the supervision of the 
insurance sector. Established in 1994, IAIS's objectives are to 
promote effective and globally consistent supervision of the insurance 
industry; to develop and maintain fair, safe, and stable insurance 
markets; and contribute to global financial stability. Its members 
include insurance supervisors and regulators from more than 200 
jurisdictions in approximately 140 countries, including the United 
States.[Footnote 12] Nongovernmental organizations and private sector 
entities also participate in IAIS activities as observers. As noted 
above, IAIS is a member of the Joint Forum. 

CPSS: 

CPSS is a standard-setting body for payment, clearing, and securities 
settlement systems. Established in 1990, it also serves as a forum for 
central banks to monitor and analyze developments in domestic payment, 
clearing, and settlement systems. Its members include 25 central banks 
responsible for payment and settlement systems. CPSS is a member of 
FSB and cooperates with other groups, including IOSCO and the Basel 
Committee, to address issues of common concern. 

IADI: 

IADI is the global standard-setting body for deposit insurers. IADI 
activities include developing principles, standards, and guidance to 
enhance the effectiveness of deposit insurance systems, methodologies 
for the assessment of compliance with its principles, standards, and 
guidelines, and facilitating assessment processes. IADI also provides 
guidance for establishing new--and enhancing existing--deposit 
insurance systems, and encourages international contact among deposit 
insurers and other interested parties. IADI has 73 member 
organizations from 71 countries. It recently worked with the Basel 
Committee to produce the Core Principles for Effective Deposit 
Insurance Systems, which was designated by FSB as one of the 12 key 
standards for sound financial systems. 

IASB: 

IASB is the standard-setting body of the IFRS Foundation, an 
independent, nonprofit, private sector organization working in the 
public interest. Established in 2001, IASB carries out the IFRS 
Foundation's stated objective of developing a single set of high-
quality, understandable, enforceable, and globally accepted accounting 
standards.[Footnote 13] IASB members are responsible for the 
development and publication of International Financial Reporting 
Standards (IFRS). IASB members are independent experts, and the board 
is required to reflect geographical diversity. The IFRS Foundation 
also has as principal objectives promoting the use and rigorous 
application of IFRS; taking account of the reporting needs of emerging 
economies and small and medium-sized entities; and promoting and 
facilitating the adoption of IFRS through the convergence of national 
accounting standards and IFRS. 

Informal Groups: 

Various jurisdictions also have formed informal coalitions to address 
specific multilateral financial issues. For example, according to U.S. 
regulatory officials who are involved in the group, the OTC 
Derivatives Regulators Group (ODRG) is an informal group of regulators 
in jurisdictions that account for the most significant derivatives 
activity around the world: Australia, Brazil, the European Union, Hong 
Kong SAR, Japan, Ontario and Quebec (Canada), Singapore, Switzerland, 
and the United States.[Footnote 14] ODRG focuses more strategically 
than the committees and activities under FSB and IOSCO on addressing 
critical cross-border issues in the OTC derivatives markets. ODRG 
reports periodically to the G20 finance ministers and central bank 
governors about its progress in identifying and addressing cross-
border regulatory issues. 

Overview of the G20 Leaders' Regulatory Reform Agenda and 
Implementation Process: 

The G20 leaders have committed to undertake a broad range of financial 
regulatory reforms since the 2007-2009 financial crisis. In 2008, the 
G20 leaders established principles for financial regulatory reform and 
developed a list of initial reform commitments. Through the eight 
summits held between 2008 and 2013, the G20 leaders have revised and 
expanded the areas covered by their reform agenda.[Footnote 15] Table 
1 summarizes the key sectors and functional areas covered by the G20 
financial reform commitments. 

Table 1: Key Reform Areas Addressed by G20 Leaders: 

Reform area: Banking; 
Summary G20 reform commitments: Increase banks' resilience to shocks 
by, among other things, raising capital requirements and introducing 
liquidity standards and a leverage ratio requirement. Strengthen 
banks' risk management practices and deposit insurance regimes. 

Reform area: OTC derivatives; 
Summary G20 reform commitments: Standardized OTC derivative contracts 
should be traded on exchanges or electronic trading platforms, where 
appropriate, and cleared through central counterparties. OTC 
derivative contracts should be reported to trade repositories. OTC 
derivatives that are not cleared through a central counterparty should 
be subject to higher capital and margin requirements. 

Reform area: Compensation practices; 
Summary G20 reform commitments: Reform compensation practices to 
support financial stability. 

Reform area: Enhanced Supervision of Systemically Important Financial 
Institutions (SIFIs) and Resolution Regimes[A]; 
Summary G20 reform commitments: Define the scope of SIFIs and 
determine and enhance their appropriate regulation or oversight. 
Resolution regimes should ensure an orderly wind-down of SIFIs, with 
the overall goal of reducing the moral hazard of SIFIs (ending "too 
big to fail"). 

Reform area: Shadow banking; 
Summary G20 reform commitments: Expand the regulatory perimeter, 
including strengthening the regulation and oversight of shadow 
banking, and focusing on regulatory gaps and risks. 

Reform area: Hedge funds; 
Summary G20 reform commitments: Establish registration, appropriate 
disclosures, and oversight of hedge funds. Establish international 
information sharing framework and enhance counterparty risk management. 

Reform area: Securitization; 
Summary G20 reform commitments: Improve risk management for 
securitization, strengthen supervisory requirements or best practices 
for investment in structured products, and enhance disclosure of 
securitized products. 

Reform area: Macroprudential frameworks and tools; 
Summary G20 reform commitments: Establish a regulatory framework for 
macroprudential oversight, which includes enhanced systemwide 
monitoring and the use of macroprudential instruments. Improve 
cooperation between supervisors and central banks. 

Reform area: Credit rating agencies; 
Summary G20 reform commitments: Improve oversight, including 
registration of credit rating agencies; 
enforcing compliance and requiring changes to rating agency practices 
for managing conflicts of interest; 
and reducing reliance on credit ratings. 

Reform area: Accounting standards; 
Summary G20 reform commitments: Convergence by key international 
accounting standards bodies. 

Reform area: Financial markets; 
Summary G20 reform commitments: Undertake measures to address the 
risks posed by high frequency trading and "dark liquidity." Enhance 
market integrity and efficiency, and enhance market transparency in 
commodity markets. 

Reform area: Consumer Protection; 
Summary G20 reform commitments: Improve consumer finance protection 
related to issues such as disclosure, transparency, and education; 
protection from fraud, abuse and errors; 
and recourse and advocacy. 

Source: GAO summary of G20 and FSB documents. 

[A] FSB considers resolution regimes as part of a comprehensive "too-
big-to-fail" framework to address risks posed by SIFIs. FSB notes that 
too-big-to-fail problems are when the threatened failure of a SIFI 
leaves public authorities with no option but to provide public funds 
to avoid widespread financial instability and economic damage. 

[End of table] 

The G20 leaders generally have called on their national authorities--
along with FSB; standard setting bodies, such as the Basel Committee 
and IOSCO; and other bodies--to convert their broad financial reform 
commitments into more specific standards (including policies, 
principles, practices, or guidance).[Footnote 16] Although the 
standards are developed under the auspices of FSB or standard setting 
bodies (or both), the work of many of these entities largely is 
carried out by staff of finance ministries, central banks, and 
financial sector regulators of the member jurisdictions. Because 
international standards are not legally binding, individual countries 
or jurisdictions must voluntarily adopt them, such as through 
legislative or regulatory changes, or both, for the standards to take 
effect. For example, a jurisdiction may need to pass legislation and 
adopt regulations to implement one standard but only a regulation to 
implement another standard. In that regard, the legal and practical 
abilities of the G20 leaders to commit to legal and regulatory changes 
can vary widely, depending on the structure of the regulatory system 
in their jurisdictions (i.e., whether there are independent regulatory 
agencies) and on the nature of the relationship between the executive 
and legislative branches in their jurisdictions. Figure 2 illustrates 
this multistep process. 

Figure 2: The G20-Initiated International Financial Reform Process: 

[Refer to PDF for image: process illustration] 

Group of 20 (G20): 
Identifies Reform commitments. 

Individual G20 members: 
Agree to implementation. 

International bodies: 
Translate reform areas into standards; 
Recommend standards to Group of 20 (G20); 
Monitor implementation. 

Individual member jurisdictions: 
Implementation. 

Source: GAO, based on international organization website information. 

[End of figure] 

Although the G20 is serving as the main forum at the international 
level for reforming financial regulations, some academics have 
questioned the reliance on the G20 and other international bodies to 
reform international financial standards, citing various potential 
challenges with the current approach. For example, some maintain that 
international financial standards existed before the 2007-2009 
financial crisis and were intended to reduce systemic risk but failed 
to prevent or mitigate the recent crisis.[Footnote 17] However, U.S. 
regulators and others have pointed to gaps or weaknesses in the 
international framework or standards that existed before the crisis 
and that the G20 reforms are intended to address. Additionally, some 
academics have questioned the potential effectiveness of international 
financial agreements or standards, arguing that their informal and 
nonbinding nature allows members to suffer limited consequences for 
noncompliance. In contrast, they also note that the informal approach 
influences behavior, with many governments adopting international 
financial standards into domestic law, or maintain that a formal 
approach to enforcement would not necessarily be more effective and 
could raise domestic sovereignty issues.[Footnote 18] Finally, some 
academics have commented that FSB's limited and skewed geographic 
membership--despite its expansion to include some emerging countries--
still may affect perceptions about its legitimacy.[Footnote 19] 
However, FSB's charter includes provisions for FSB to consult with 
nonmembers on strategic plans, principles, standards, and guidance, 
and to allow nonmembers to participate, on an ad hoc basis, in its 
working groups and committee meetings. As discussed earlier, FSB has a 
work plan to review the structure of its representation, which is to 
be completed by the November 2014 summit. 

The Dodd-Frank Act: 

Congress passed the Dodd-Frank Act in 2010 in response to the 
regulatory and oversight weaknesses identified after the 2007-2009 
financial crisis. As summarized on the Senate Banking Committee's 
website, the act seeks to (1) address risks to the stability of the 
U.S. financial system, in part through the creation of the Financial 
Stability Oversight Council (FSOC), (2) end too-big-to-fail bailouts 
of large, complex financial institutions, (3) increase transparency 
and regulation for certain complex financial instruments, and (4) 
strengthen protections for consumers and investors. The act requires 
federal agencies to issue hundreds of regulations to implement the 
act's requirements. Regulators have proposed many of the rules, but 
many of the Dodd-Frank Act rulemakings had yet to be finalized as of 
December 2013.[Footnote 20] As discussed later in this report, many of 
the Dodd-Frank Act's provisions are similar to the international 
financial reform commitments agreed to by the G20 leaders. 

United States Has Played an Active Role in International Financial 
Regulatory Reforms but Has Faced Challenges: 

The United States has been active in the international financial 
regulatory reforms intended to address regulatory and other weaknesses 
revealed by the 2007-2009 financial crisis. Through its participation 
in the G20, the United States has helped set the G20 financial 
regulatory reform agenda. Moreover, through their participation on 
various international bodies, U.S. financial regulators and, where 
relevant, Treasury have helped develop standards to implement the G20 
reform agenda. However, U.S. financial regulators have faced 
challenges in implementing the G20 financial reform agenda. 

United States Has Helped Set the G20 Financial Regulatory Reform 
Agenda: 

The United States has played an important role in elevating the G20 
summits to the level of head of state (or government) and in setting 
G20 agendas for reforming international financial regulation. 
According to Treasury officials, during the acute phase of the 
financial crisis in 2008, the United States proposed elevating the G20 
forum from the traditional level of finance ministers and central 
banks to the level of heads of state or government. To that end, the 
G20 leaders, including the U.S. President, held a summit for the first 
time in Washington, D.C., in November 2008. The main objective for 
elevating the G20 forum was to help the world's major economies cope 
with the then-ongoing financial crisis and establish a framework to 
help prevent future financial crises. Among other things, the G20 
leaders established principles for financial regulatory reform and 
developed a list of initial reform commitments. The U.S. President has 
attended the subsequent G20 leaders' summits and has continued to play 
an active role in helping to support or expand the G20 financial 
reform agenda. The G20 members' finance ministers and central bankers 
also have been meeting regularly to advance the reform agenda. 

In addition to the U.S. President's direct participation in the G20 
summits, the United States has helped to set the G20 financial reform 
agenda. For example, as host to the G20 summit in Washington (2008) 
and Pittsburgh (2009), U.S. officials were responsible for 
coordinating the preparation of the summit agendas and reform 
agreements. Agreements reached at the Pittsburgh summit included 
commitments by the G20 leaders to regulate the OTC derivatives markets 
and establish procedures to manage the failure of systemically 
important financial institutions. Moreover, U.S. officials have helped 
support and advance specific reform proposals for other summits. For 
example, in the lead-up to the London G20 summit in 2009, the United 
States publicly supported increasing capital requirements for banks, 
creating FSB, and expanding the scope of regulation to systemically 
important institutions and markets. In the lead-up to the Toronto 
summit in June 2010, the United States reiterated its support for more 
stringent capital and liquidity requirements for banks. At the Toronto 
summit, leaders pledged to endorse the forthcoming capital reforms 
(i.e., the Basel III capital standards) at their summit in Seoul in 
November 2010.[Footnote 21] 

The United States also has been coordinating with international bodies 
and regulators to put in place domestic financial reforms. For 
instance, after the G20 summit in Seoul in November 2010, U.S. 
officials noted that the passage of the Dodd-Frank Act put the United 
States at the forefront of global financial reform. U.S. officials 
also highlighted that a number of the Dodd-Frank Act's provisions 
aligned with the G20 reform commitments. These included provisions for 
(1) a resolution regime, (2) a framework of oversight and reporting 
for OTC derivatives markets, (3) regulation of all firms that pose the 
most risk to the financial system, and (4) a registration requirement 
for advisers to hedge funds.[Footnote 22] Further, the officials noted 
that the United States is working closely with the European Union and 
others to ensure that the G20's agenda for regulatory reform is 
implemented. 

United States Has Helped Develop International Financial Standards: 

The G20 leaders rely on their national authorities, FSB, and 
international standard setting bodies to implement their financial 
regulatory reform commitments. FSB and the standard setting bodies are 
membership organizations that rely substantially on finance 
ministries, central banks, and regulators from their member 
jurisdictions to help guide and carry out their work. Like the G20, 
FSB and many of the standard setting bodies follow a consensus-based 
decision-making process to develop their standards. U.S. banking 
regulators (FDIC, the Federal Reserve, and OCC), CFTC, SEC, and 
Treasury are members of FSB or standard setting bodies (or both) and, 
in some cases, have leadership roles, such as serving as committee 
chairs. Examples of international bodies in which U.S. authorities are 
members and have leadership roles include the following: 

* FSB: FSB coordinates implementation of the G20 financial reform 
agenda. The Federal Reserve, SEC, and Treasury serve on FSB's Steering 
Committee and Plenary, which is FSB's decision-making body. These 
agencies also chair or are members of three key standing committees 
and, with CFTC, FDIC, the Federal Reserve Bank of New York, and OCC, 
have participated in or chaired other FSB working groups. 

* Basel Committee: The Basel Committee develops prudential standards 
for banks. FDIC, the Federal Reserve, and OCC are members of the Basel 
Committee. OCC chairs one of two key subcommittees--the Supervision 
and Implementation group. FDIC officials noted that the agency chairs 
a task force exploring options to improve the simplicity and 
comparability of the capital framework. 

* IOSCO: IOSCO sets global standards for the securities sector. SEC 
and CFTC have served in leadership roles in IOSCO and informal groups. 
For example, SEC and CFTC are both members of the IOSCO Board. In 
addition, CFTC and SEC co-chaired an IOSCO OTC derivatives task force 
that established standards for mandatory clearing. CFTC also co-chairs 
a separate IOSCO committee on commodity derivatives. 

* CPSS: CPSS sets global standards for payment, clearing, and 
securities settlement systems. The Federal Reserve and Federal Reserve 
Bank of New York are members of CPSS. They have participated in a 
number of CPSS and CPSS-IOSCO efforts, including the development of 
risk management standards for financial market infrastructures. 

* IAIS: IAIS sets global standards for the insurance industry. The 
U.S. Treasury's Federal Insurance Office chairs an IAIS committee that 
leads the development of prudential standards. The Federal Insurance 
Office also has served in leadership roles and as a member of other 
IAIS committees, subcommittees, and working groups. 

* IADI: IADI sets global standards for deposit insurers. The FDIC is 
an active member of IADI, sits on its Executive Council, and chairs 
and participates in a number of IADI committees, subcommittees, and 
working groups. 

Figure 3 shows which U.S authorities are members of selected 
international bodies (as represented by the solid lines). Although 
CFTC, FDIC, and OCC are not members of FSB, they have participated in 
or chaired FSB working groups (as represented by the dashed lines). 

Figure 3: U.S. Federal Agencies' Membership in Selected International 
Bodies: 

[Refer to PDF for image: illustration] 

U.S. federal agencies: Commodity Futures Trading Commission (CFTC)[A]: 
U.S. federal agency is member of indicated international body: 
International Organization of Securities Commissions (IOSCO); 
U.S. federal agency is not a member of FSB but participates in 
selected FSB activities: 
Financial Stability Board (FSB). 

U.S. federal agencies: Federal Deposit Insurance Corporation (FDIC)[A]: 
U.S. federal agency is member of indicated international body: 
Basel Committee on Banking Supervision (Basel Committee); 
International Association of Deposit Insurers (IADI); 
U.S. federal agency is not a member of FSB but participates in 
selected FSB activities: 
Financial Stability Board (FSB). 

U.S. federal agencies: Federal Reserve Board of Governors (Federal 
Reserve): 
U.S. federal agency is member of indicated international body: 
Group of Twenty (G20) – Finance Ministers and Central Bank Governor; 
Financial Stability Board (FSB); 
Committee on Payment and Settlement Systems (CPSS). 

U.S. federal agencies: Office of the Comptroller of the Currency[A]: 
U.S. federal agency is member of indicated international body: 
International Organization of Securities Commissions (IOSCO); 
U.S. federal agency is not a member of FSB but participates in 
selected FSB activities: 
Financial Stability Board (FSB). 

U.S. federal agencies: Securities and Exchange Commission (SEC): 
U.S. federal agency is member of indicated international body: 
International Association of Insurance Supervisors (IAIS); 
Financial Stability Board (FSB). 

U.S. federal agencies: U.S. Department of the Treasury: 
U.S. federal agency is member of indicated international body: 
Group of Twenty (G20) – Finance Ministers and Central Bank Governors; 
Financial Stability Board (FSB); 
International Association of Insurance Supervisors (IAIS). 

Source: GAO, based on international organization and U.S. federal 
agency information. 

[A] CFTC, FDIC, and OCC are not members of FSB but participate in 
selected FSB activities. 

[End of figure] 

As members of FSB and international standard setting bodies, U.S. 
financial regulators and Treasury have been actively involved in 
developing many of the international financial standards (including 
policies, principles, practices, or guidance) that implement the G20 
financial reform commitments. Since 2008, FSB and international 
standard setting bodies have developed an array of new or revised 
standards covering a broad range of issues including banking, OTC 
derivatives, compensation practices, shadow banking, and SIFIs and 
resolution regimes. (See appendix III for a more detailed list of 
reform areas and objectives, related standards, and the participation 
of U.S. agencies.) Examples of standards that U.S. authorities helped 
develop include the following: 

* Basel capital standards: FDIC, the Federal Reserve, Federal Reserve 
Bank of New York, and OCC, as U.S. representatives to the Basel 
Committee, helped develop the Basel III capital standards, which set 
higher levels for capital requirements for banks and introduced a new 
global liquidity standard.[Footnote 23] The Basel Committee released 
Basel III in December 2010, in part in response to the G20 leaders' 
calls for higher standards for capital and enhanced supervision. 

* OTC derivatives reforms: CFTC, the Federal Reserve, or SEC helped 
develop standards issued by IOSCO or CPSS (or both) for financial 
market infrastructures, central clearing of OTC derivatives, and 
reporting of OTC derivatives.[Footnote 24] These standards respond to 
the G20 leaders' commitment in 2009 to ensure that all standardized 
OTC derivative contracts would be traded on organized platforms, where 
appropriate, and cleared through central counterparties; and all OTC 
derivatives contracts would be reported to trade 
repositories.[Footnote 25] CFTC, FDIC, the Federal Reserve, OCC, and 
SEC helped develop standards issued by the Basel Committee and IOSCO 
on margin requirements for non-centrally cleared OTC derivatives, as 
requested by the G20.[Footnote 26] 

* Enhanced supervision of SIFIs and resolution regimes: FDIC, the 
Federal Reserve Bank of New York, and Treasury helped develop 
standards issued by FSB for resolution regimes. The regimes would help 
enable authorities to resolve failing financial firms in an orderly 
manner and without exposing the taxpayer to the risk of loss.[Footnote 
27] According to FSB, these standards respond to a 2009 request by the 
G20 leaders to address too-big-to-fail problems associated with SIFIs--
that is, when the threatened failure of a SIFI leaves public 
authorities with no option but to provide public funds to avoid 
widespread financial instability and economic damage.[Footnote 28] 
Moreover, the standards are part of a broader SIFI framework intended 
to reduce both the probability and impact of SIFIs failing.[Footnote 
29] 

U.S. Challenges Involving the G20 Financial Regulatory Reforms: 

In our discussions with U.S. federal financial regulators, they 
identified time or resource constraints as key challenges in helping 
to develop international financial standards. One regulator said its 
staff members feel tension between allocating time to their routine 
regulatory duties and their international work. A U.S. regulator also 
said that since 2008, there has been a constantly increasing number of 
work streams, groups, and projects flowing from the G20, many with 
relatively short deadlines. Moreover, the number of overall projects 
tends to increase over time as old projects evolve into new areas and 
new projects are initiated. One of the regulators estimated that the 
number of projects had at least doubled since the start of the 2007-
2009 financial crisis. Two of the regulators also told us they have 
faced resource constraints, such as not having the travel funds to 
attend meetings. 

The number of members from any one country is intended to be 
representative of the size of national economies, financial market 
activities, and national financial stability arrangements. However, 
two U.S. regulators told us FSB's selection of members has created 
additional coordination work for U.S. federal authorities. According 
to a U.S. regulator, U.S. membership in international bodies does not 
always reflect the significance of the U.S. economy. For example, 
while U.S. firms have a dominant share of the OTC derivatives markets, 
CFTC--one of the primary U.S. regulators responsible for overseeing 
derivatives markets--has no representation on the FSB Plenary, the FSB 
decision-making body. As a result, U.S. regulators have had to devote 
time and effort coordinating input and responses from U.S. regulators 
not represented on FSB. Treasury officials told us that FSB must limit 
the number of representatives from any member jurisdiction to prevent 
its membership from becoming too unwieldy, but recognized that this 
limitation creates additional coordination work for U.S. financial 
regulators. Treasury staff told us that to address this limitation 
Treasury established a liaison, who coordinates closely and regularly 
with all U.S. financial regulators to keep them informed of FSB's 
activities and work products and to obtain their input. 

United States and Other Jurisdictions Report Having Made Progress 
Implementing International Reforms, but Most Reforms Have Not Been 
Fully Implemented: 

The United States and other jurisdictions report having made progress 
implementing the G20's international financial reforms, but most 
reforms have not been implemented by all jurisdictions. Under its 
mandate, FSB is responsible for coordinating and promoting the 
monitoring of the implementation of the G20 reform commitments and 
reporting on the implementation progress to the G20. In collaboration 
with standard setting bodies, FSB established a framework in 2011 to 
monitor and report on the implementation of the G20 financial reform 
commitments, including the related international financial 
standards.[Footnote 30] In addition, FSB and IMF have programs to 
assess members' compliance with international financial standards and 
foster a level playing field. However, a broad range of legal, 
economic, and political factors can create implementation challenges 
for jurisdictions. The failure to implement the international reforms 
consistently could, among other things, hinder the ability of national 
authorities or international bodies to protect against developments 
affecting national and international financial stability. 

Jurisdictions Vary in Their Implementation Stage of the Priority Area 
Reforms: 

FSB has selected priority reform areas that undergo more intensive 
monitoring and detailed reporting than other reform areas, and the 
list of priority areas is reviewed annually by FSB and revised as 
needed.[Footnote 31] FSB selects the areas based on the importance of 
their consistent and comprehensive implementation to global financial 
stability. For each priority area, an FSB working group or standard 
setting body is responsible for monitoring implementation progress and 
periodically preparing a progress report.[Footnote 32] Currently, 
FSB's priority areas are (1) the Basel framework; (2) OTC derivatives 
market reforms; (3) policy measures for SIFIs; (4) resolution regimes, 
(5) compensation practices; and (6) shadow banking.[Footnote 33] Based 
on recent progress reports, jurisdictions vary in their implementation 
stage of the priority area reforms. 

Implementation of Basel III Standards: 

At their 2010 summit in Seoul, the G20 leaders endorsed Basel III 
capital standards and committed to adopt and implement the 
standards.[Footnote 34] According to the Basel Committee's progress 
report issued in October 2013, 11 of its 27 members had implemented in 
full the Basel capital framework, which includes Basel II, 2.5, and 
III standards (see table 2).[Footnote 35] Specifically, 12 
jurisdictions reported that they had issued final Basel III capital 
rules that were legally in force. At that time, the United States and 
14 other jurisdictions reported that they had issued final rules to 
implement the Basel III capital standards, but the rules had not yet 
taken effect.[Footnote 36] The remaining member jurisdiction reported 
that a regulation on Basel III was to be issued in 2013. 

Table 2: Implementation Status of Basel Capital Framework as Reported 
by Members of the Basel Committee, as of October 2013: 

Country or jurisdiction: Argentina; 
Basel II: Implementation ongoing; 
Basel 2.5: Implementation ongoing; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Australia; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: Belgium; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Brazil; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: Canada; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: China; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: European Union; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: France; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Germany; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Hong Kong SAR; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: India; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: Indonesia; 
Basel II: Implemented; 
Basel 2.5: Not implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Italy; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Japan; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: Luxembourg; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Mexico; 
Basel II: Implemented; 
Basel 2.5: Implementation ongoing; 
Basel III[A]: Implemented. 

Country or jurisdiction: Netherlands; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Russia; 
Basel II: Implementation ongoing; 
Basel 2.5: Implementation ongoing; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Saudi Arabia; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: Singapore; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: South Africa; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: South Korea; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Spain; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Sweden; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: Switzerland; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implemented. 

Country or jurisdiction: Turkey; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: United Kingdom; 
Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III[A]: Implementation ongoing. 

Country or jurisdiction: United States; 
Basel II: Implementation ongoing; 
Basel 2.5: Implementation ongoing; 
Basel III[A]: Implementation ongoing. 

Source: Basel Committee on Banking Supervision. 

[A] Basel Committee members agreed to implement Basel III from January 
1, 2013, through January 1, 2019, subject to transitional and phase-in 
arrangements. 

[End of table] 

As previously discussed, although the Basel Committee members have 
adopted or will adopt rules to implement the Basel capital standards, 
the adoption of the standards does not necessarily ensure that they 
will be applied consistently across banks and jurisdictions. In that 
regard, the Basel Committee established the Regulatory Consistency 
Assessment Program in 2012. The committee monitors the transposition 
of Basel III standards into domestic regulations semiannually based on 
information provided by each of its member jurisdictions. The aim of 
such monitoring is to ensure that the internationally agreed timeline 
remains on track. The committee publishes its results in regular 
progress reports (discussed earlier). 

The Basel Committee also assesses the consistency of implementation of 
the Basel III standards. These assessments are done on a 
jurisdictional and thematic basis. 

* Member jurisdictional assessments review the extent to which 
domestic Basel III regulations in each member jurisdiction are aligned 
with the Basel III standards. The assessments examine the consistency 
and completeness of the adopted standards, including the significance 
of any deviations in the standards, and provide an overall assessment 
of compliance using a four-grade scale: compliant, largely compliant, 
materially non-compliant, and noncompliant. As of year-end 2013, the 
committee had completed seven jurisdictional assessments. In its 
assessments of Brazil, China, Switzerland, Singapore, and Japan, the 
committee found their rules generally to be compliant with the Basel 
standards. The committee conducted assessments of the European Union's 
and United States' proposed Basel III rules but did not assign them a 
grade because of the draft nature of the rules.[Footnote 37] 

* Thematic assessments review regulatory outcomes to ensure that the 
prudential ratios calculated by banks are consistent across banks and 
jurisdictions and predominantly reflect differences in risk rather 
than in practice. The committee initially focused its thematic 
assessments on analyzing how banks were weighing (or valuing) assets 
based on their risk level, because differences in the application of 
the Basel standards can lead to variations in the amount of capital 
banks have to hold. In that regard, the objective of the assessments 
generally has been to obtain a preliminary estimate of the potential 
for variation in risk-weighted assets across banks and highlight 
aspects of the Basel standards that contribute to this variation. The 
committee's two assessments on this issue found considerable variation 
across banks in the average risk-weighted assets for market risk in 
the trading book and credit risk in the banking book.[Footnote 38] 
Part of the variation was attributed to differences in supervisory 
practices or decisions. According to a Basel Committee Chairman, 
information from the studies is being used by national supervisors and 
banks to take action where needed, such as to improve consistency. The 
Basel Committee also plans to use the results as part of its ongoing 
policy work. 

Implementation of the OTC Derivatives Reforms: 

At the 2009 summit in Pittsburgh, the G20 leaders committed that all 
standardized OTC derivatives should be traded on organized trading 
platforms and centrally cleared; all OTC derivatives should be 
reported to a repository; and all noncentrally cleared OTC derivatives 
should be subject to higher capital requirements. At the 2011 summit 
in Cannes, the G20 leaders further agreed to require noncentrally 
cleared OTC derivatives to be subject to margin requirements--the 
posting of collateral to offset losses caused by the default of a 
derivatives counterparty. FSB and standard setting bodies, including 
the Basel Committee, CPSS, and IOSCO, have issued most of the 
standards needed to implement the G20 OTC derivatives reforms. 
[Footnote 39] 

According to FSB's sixth progress report on implementation of OTC 
derivatives market reforms issued in September 2013, over half of 
FSB's 19 member jurisdictions, including the United States, reported 
having proposed or enacted legislation to require OTC derivatives 
transactions to be centrally cleared, traded on organized trading 
platforms, and reported to trade repositories.[Footnote 40] As shown 
in table 3, five jurisdictions, including the United States, reported 
having proposed or enacted legislation to implement the margin 
requirements. Table 3 also shows that the United States is the only 
jurisdiction with regulations in force and operating for the central 
clearing, organized platform trading, and trade reporting requirements 
(for at least part of the market), but many jurisdictions reported 
having adopted regulations for the trade reporting requirement. Only 
one jurisdiction reported having adopted regulations for the margin 
requirement. According to FSB, the schedule for further changes in 
legislative and regulatory frameworks is uneven across jurisdictions 
and commitment areas. 

Table 3: Implementation Status of the G20 OTC Derivatives Reforms as 
Reported by FSB Member Jurisdictions, as of September 2013: 

Jurisdiction: Argentina; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: No Action; 
Margin: No Action; 
Status of regulation: 
Central clearing: Adopted; 
Status of regulation: 
Exchange or platform trading: Adopted; 
Reporting to trade repository: No Action; 
Margin: No Action. 

Jurisdiction: Australia; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: No Action; 
Status of regulation: 
Central clearing: Consultation; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Adopted; 
Margin: No Action. 

Jurisdiction: Brazil; 
Status of legislation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Adopted; 
Margin: No Action; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Effective; 
Margin: No Action. 

Jurisdiction: Canada; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: No Action; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Consultation; 
Margin: No Action. 

Jurisdiction: China; 
Status of legislation: 
Central clearing: Proposed; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: No Action; 
Status of regulation: 
Central clearing: Proposed; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: No Action. 

Jurisdiction: European Union; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: Proposed; 
Reporting to trade repository: Adopted; 
Margin: Adopted; 
Status of regulation: 
Central clearing: Adopted; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Adopted; 
Margin: No Action. 

Jurisdiction: Hong Kong SAR; 
Status of legislation: 
Central clearing: Proposed; 
Exchange or platform trading: Proposed; 
Reporting to trade repository: Proposed; 
Status of legislation: 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Adopted; 
Margin: No Action. 

Jurisdiction: India; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: Adopted; 
Status of regulation: 
Central clearing: Adopted; 
Exchange or platform trading: Partially adopted; 
Reporting to trade repository: Adopted; 
Margin: Partially adopted. 

Jurisdiction: Indonesia; 
Status of legislation: 
Central clearing: No Action; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: No Action; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: No Action. 

Jurisdiction: Japan; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: No Action; 
Status of regulation: 
Central clearing: Effective; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Effective; 
Margin: No Action. 

Jurisdiction: Mexico; 
Status of legislation: 
Central clearing: NA; 
Exchange or platform trading: NA; 
Reporting to trade repository: NA; 
Margin: NA; 
Status of regulation: 
Central clearing: Consultation; 
Exchange or platform trading: Consultation; 
Reporting to trade repository: Consultation; 
Margin: No Action. 

Jurisdiction: Russia; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: NA; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Adopted; 
Margin: No Action. 

Jurisdiction: Saudi Arabia; 
Status of legislation: 
Central clearing: NA; 
Exchange or platform trading: NA; 
Reporting to trade repository: NA; 
Margin: NA; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Effective; 
Margin: No Action. 

Jurisdiction: Singapore; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: Consultation; 
Reporting to trade repository: Adopted; 
Margin: No Action; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Consultation; 
Margin: No Action. 

Jurisdiction: South Africa; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: Adopted; 
Reporting to trade repository: Adopted; 
Margin: Partially adopted; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Consultation; 
Margin: No Action. 

Jurisdiction: South Korea; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Adopted; 
Margin: No Action; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Effective; 
Margin: No Action. 

Jurisdiction: Switzerland; 
Status of legislation: 
Central clearing: Consultation; 
Exchange or platform trading: Consultation; 
Reporting to trade repository: Partially adopted; 
Margin: Consultation; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: No Action; 
Margin: No Action. 

Jurisdiction: Turkey; 
Status of legislation: 
Central clearing: Adopted; 
Exchange or platform trading: No Action; 
Reporting to trade repository: Adopted; 
Margin: No Action; 
Status of regulation: 
Central clearing: No Action; 
Exchange or platform trading: No Action; 
Reporting to trade repository: No Action; 
Margin: No Action. 

Jurisdiction: United States; 
Status of legislation: Central clearing: Adopted; 
Status of legislation: Exchange or platform trading: Adopted; 
Status of legislation: Reporting to trade repository: Adopted; 
Status of legislation: Margin: Adopted; 
Status of regulation: Central clearing: Adopted; 
Status of regulation: Exchange or platform trading: Adopted; 
Status of regulation: Reporting to trade repository: Adopted; 
Status of regulation: Margin: Proposed. 

Source: FSB. 

Notes: "No action" means that no action has been taken to date. "NA" 
means not applicable in the jurisdiction (i.e., legislative changes or 
implementing rules may not be needed in certain jurisdictions). 
"Consultation" means that official documents have been published for 
public consultation. "Proposed" means draft legislation or regulations 
have been submitted through the appropriate process. "Partially 
adopted" means that final legislation or rules have been adopted for 
part of the relevant commitment area and are enforceable. "Adopted" 
means that final legislation or rules have been adopted by the 
appropriate bodies and are enforceable. "Partially effective" means 
regulations are in force and operating for a part of the market. 
"Effective" means that regulations are in force and operating. 
Although the G20 OTC derivatives reform commitments cover capital, our 
table omits implementation of the capital requirements, because the 
requirements generally are addressed by the Basel capital framework 
(discussed above). 

[End of table] 

In its progress report, FSB also noted that in light of the global 
nature of OTC derivatives markets, cross-border coordination was 
needed to avoid unnecessary duplicative, inconsistent, or conflicting 
regulations.[Footnote 41] FSB plans to publish a progress report by 
April 2014 that provides, among other things, an updated assessment of 
reform implementation, including any remaining issues in the cross-
border application of regulations. 

While cross-border coordination issues persist, we reported in late 
2013 that CFTC and SEC took steps to coordinate with foreign 
authorities on several rulemakings related to Dodd-Frank swap reforms, 
which include clearing, exchange trading, and reporting 
requirements.[Footnote 42] For example, CFTC issued many swap-related 
rules and noted that it coordinated with international bodies, such as 
the European Securities Markets Authority, European Central Bank, and 
regulators in the United Kingdom, Japan, Hong Kong SAR, Singapore, 
Sweden, and Canada. On the swap entities rule, CFTC and SEC staffs 
said that they participated in numerous conference calls and meetings 
with international regulators. 

Implementation of the G20 Reforms for SIFIs: 

The 2007-2009 financial crisis revealed weaknesses in the existing 
regulatory framework for overseeing SIFIs, which FSB defines as 
institutions of such size, market importance, and interconnectedness 
that their distress or disorderly failure could destabilize the 
financial system and result in severe economic consequences. According 
to FSB, when the threatened failure of a SIFI leaves public 
authorities with no option but to provide public funds to avoid 
financial instability and economic damage, the SIFI can be considered 
too big--or too important--to fail.[Footnote 43] The knowledge that 
this can happen could encourage SIFIs to take excessive risks 
(referred to as moral hazard) and may represent a large implicit 
public subsidy of private enterprise. At the Pittsburgh Summit in 
2009, G20 leaders called on FSB to propose measures to address the 
systemic and moral hazard risks associated with SIFIs. FSB developed a 
framework intended to reduce the probability and impact of SIFIs 
failing.[Footnote 44] The SIFI framework recommends new international 
standards for national resolution regimes (called "Key Attributes of 
Effective Resolution Regimes for Financial Institutions") and 
requirements for banks determined to be globally systemically 
important to have additional loss absorption capacity to reflect the 
greater risk they pose to the global financial system. At the 2010 
summit in Seoul, the G20 leaders endorsed the FSB's SIFI framework. 

Resolution Regimes: 

In its April 2013 peer review report on resolution regimes, FSB 
reported that some of its member jurisdictions developed new or 
revised existing resolution regimes.[Footnote 45] For example, FSB 
noted that the United States has implemented a new resolution regime--
referred to as Orderly Liquidation Authority (OLA)--aligned with FSB's 
key attributes through its passage of the Dodd-Frank Act. OLA includes 
broad authorities to wind-up failing financial companies that meet 
certain systemic criteria. FSB also noted that Australia, Germany, 
Mexico, Netherlands, Spain, Switzerland, and the United Kingdom have 
amended their resolution regimes through legislative changes.[Footnote 
46] At the same time, FSB noted that many of its member jurisdictions 
need to take further legislative measures to implement the key 
attributes fully in substance and scope. In its report entitled Report 
on Progress and Next Steps Towards Ending Too-Big-To-Fail (TBTF) 
issued in September 2013, FSB noted that it will coordinate with IMF, 
the World Bank, and international standard setting bodies to finalize 
a methodology to assess implementation of the key attributes at the 
national level for use by IMF and the World Bank in their Standards 
and Codes Initiative (discussed later). 

In addition to legislative changes, FSB found that sector-specific 
regimes for restructuring or winding down financial firms exhibited a 
broad range of practices in terms of scope and authorities. According 
to FSB, this is to be expected, because the key attributes do not 
prescribe the specific form of the resolution regime as long as the 
regime is consistent with the key attributes. All FSB members, 
including the United States, reported that they have specific powers 
to restructure or wind up banks (or both) that are distinct from 
ordinary corporate insolvency (see table 4). However, the extent to 
which the resolution regimes also cover insurers, investment or 
securities firms, and financial market infrastructure varies across 
jurisdictions. 

Table 4: Select Features of Sector-Specific Regimes as Reported by FSB 
Member Jurisdictions, as of April 2013: 

Jurisdiction: Argentina; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: Australia; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes. 

Jurisdiction: Brazil; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: Canada; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: China; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: France; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes[B]. 

Jurisdiction: Germany; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes[B]. 

Jurisdiction: Hong Kong SAR; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes. 

Jurisdiction: India; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] No; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: Indonesia; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] No; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes. 

Jurisdiction: Italy; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes[B]. 

Jurisdiction: Japan; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes. 

Jurisdiction: Mexico; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: Netherlands; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes[B]. 

Jurisdiction: Russia; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: Saudi Arabia; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: Singapore; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: South Korea; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: South Africa; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] No; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: Spain; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes. 

Jurisdiction: Switzerland; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes. 

Jurisdiction: Turkey; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? No. 

Jurisdiction: United Kingdom; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes. 

Jurisdiction: United States; 
Authority to restructure and/or wind up banks?[A] Yes; 
Authority to restructure and/or wind up insurers?[A] Yes; 
Authority to restructure and/or wind up securities or investment 
firms?[A] Yes; 
Authority to restructure and/or wind up financial market infra-
structures?[A] Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority? Yes. 

Source: FSB. 

[A] Refers to powers for restructuring and/or winding up banks, 
insurers, securities or investment firms, and financial market 
infrastructures that are distinct from ordinary corporate insolvency 
proceedings. These powers are not necessarily aligned with those 
specified in key attribute 3 (resolution powers). 

[B] Only within the European Union. 

[End of table] 

Additionally, in its April 2013 peer review report on resolution 
regimes, FSB reported that the resolution regimes of most of its 
members neither require nor prohibit cooperation with foreign 
resolution authorities. FSB regards legal frameworks for cross-border 
cooperation as a key attribute of resolution regimes. According to 
FSB, eight jurisdictions have statutory provisions that explicitly 
empower or strongly encourage resolution authorities to cooperate with 
foreign authorities (Australia, Hong Kong SAR, Indonesia, Japan, 
Spain, Switzerland, United Kingdom, and United States) while several 
others indicated that it is their policy to cooperate where possible. 

In 2012, we reported that international coordination remains a 
critical component in resolving the failure of a large, complex 
financial company and that regulators have been taking steps to 
address this issue, including through their work with FSB.[Footnote 
47] More recently, in a 2013 report, we examined the advantages and 
disadvantages of certain proposals to revise the U.S. Bankruptcy Code 
for financial company bankruptcies, including proposals to change the 
role of financial regulators in the bankruptcy process and the special 
treatment of qualified financial contracts, such as derivatives. 
[Footnote 48] We recommended that FSOC should consider the 
implications for U.S. financial stability of changing the role of 
regulators and the treatment of qualified financial contracts in 
financial company bankruptcies. Although our recommendation continues 
to have merit, FSOC has not yet implemented the recommendation. FSB 
made related recommendations in its peer review on resolution regimes 
(discussed later)--namely designating a lead authority for resolving 
domestic entities of the same group and introducing powers to impose a 
temporary stay on the exercise of contractual acceleration or early 
termination rights in financial contracts, subject to suitable 
safeguards.[Footnote 49] 

Identification of Largest and Most Complex SIFIs: 

Complementing the resolution regime reforms, FSB, the Basel Committee, 
IAIS, and others have taken steps to reduce the probability of the 
failure of SIFIs in part by working to establish requirements aimed at 
increasing SIFIs' capacity to absorb losses. In November 2013, FSB 
published its updated annual list of global systemically important 
banks (G-SIB), which generally comprise the largest and most complex 
internationally active banks.[Footnote 50] As shown in table 5, there 
were 29 G-SIBs headquartered in 11 countries: 8 in the United States; 
4 each in France and the United Kingdom; 3 in Japan; 2 each in China, 
Spain, and Switzerland; and 1 each in Germany, Italy, Netherlands, and 
Sweden. G-SIBs are grouped into one of five buckets based on their 
systemic importance, which correspond to increasing levels of 
additional loss absorbency requirements. The requirements are to be 
updated shortly and implemented by jurisdictions and phased in from 
January 2016, with full implementation by January 2019.[Footnote 51] 

According to the Basel Committee's August 2013 progress report, Canada 
and Switzerland have issued final regulations for G-SIBs and domestic 
systemically important banks (D-SIBs) and begun to enforce them. 
[Footnote 52] Ten of the Basel Committee members have issued final D-
SIB regulations that were not yet in force (South Africa and EU member 
states). The remaining member jurisdictions, including the United 
States, had not yet issued draft rules. At the time, U.S. regulators 
expected to issue a notice of proposed rulemaking for G-SIBs by year-
end 2013.[Footnote 53] As of February 2014, the U.S. regulators had 
not issued a rule proposal to implement regulation for the Basel 
Committee G-SIB risk-based capital surcharge framework. 

Table 5: G-SIBs as of November 2013, Required Level of Additional Loss 
Absorbency, and Home Country: 

G-SIB: HSBC; 
Required level of additional loss absorbency[A]: 2.5 percent; 
Home country: United Kingdom. 

G-SIB: JP Morgan Chase; 
Required level of additional loss absorbency[A]: 2.5 percent; 
Home country: United States. 

G-SIB: Barclays; 
Required level of additional loss absorbency[A]: 2.0 percent; 
Home country: United Kingdom. 

G-SIB: BNP Paribas; 
Required level of additional loss absorbency[A]: 2.0 percent; 
Home country: France. 

G-SIB: Citigroup; 
Required level of additional loss absorbency[A]: 2.0 percent; 
Home country: United States. 

G-SIB: Deutsche Bank; 
Required level of additional loss absorbency[A]: 2.0 percent; 
Home country: Germany. 

G-SIB: Bank of America; 
Required level of additional loss absorbency[A]: 1.5 percent; 
Home country: United States. 

G-SIB: Credit Suisse; 
Required level of additional loss absorbency[A]: 1.5 percent; 
Home country: Switzerland. 

G-SIB: Goldman Sachs; 
Required level of additional loss absorbency[A]: 1.5 percent; 
Home country: United States. 

G-SIB: Group Crédit Agricole; 
Required level of additional loss absorbency[A]: 1.5 percent; 
Home country: France. 

G-SIB: Mitsubishi UFJ FG; 
Required level of additional loss absorbency[A]: 1.5 percent; 
Home country: Japan. 

G-SIB: Morgan Stanley; 
Required level of additional loss absorbency[A]: 1.5 percent; 
Home country: United States. 

G-SIB: Royal Bank of Scotland; 
Required level of additional loss absorbency[A]: 1.5 percent; 
Home country: United Kingdom. 

G-SIB: UBS; 
Required level of additional loss absorbency[A]: 1.5 percent; 
Home country: Switzerland. 

G-SIB: Bank of China; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: China. 

G-SIB: Bank of New York Mellon; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: United States. 

G-SIB: BBVA; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: Spain. 

G-SIB: Groupe BPCE; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: France. 

G-SIB: Industrial and Commercial Bank of China Limited; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: China. 

G-SIB: ING Bank; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: Netherlands. 

G-SIB: Mizuho FG; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: Japan. 

G-SIB: Nordea; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: Sweden. 

G-SIB: Santander; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: Spain. 

G-SIB: Société Générale; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: France. 

G-SIB: Standard Chartered; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: United Kingdom. 

G-SIB: State Street; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: United States. 

G-SIB: Sumitomo Mitsui FG; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: Japan. 

G-SIB: Unicredit Group; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: Italy. 

G-SIB: Wells Fargo; 
Required level of additional loss absorbency[A]: 1 percent; 
Home country: United States. 

Source: GAO analysis of FSB reports. 

[A] The additional loss absorbency requirements will be phased in 
starting in January 1, 2016. 

[End of table] 

FSB and standard setting bodies also have been extending the SIFI 
framework to other institutions.[Footnote 54] First, in response to a 
request by the G20 leaders, FSB extended the G-SIFI framework to 
domestic systemically important banks. In October 2012, the Basel 
Committee issued its framework for dealing with such banks, which 
focuses on the impact that the distress or failure of banks will have 
on the domestic economy.[Footnote 55] Second, IAIS developed a 
methodology to identify global systemically important 
insurers.[Footnote 56] In July 2013, FSB, in consultation with IAIS 
and national authorities, identified nine insurers (including three 
U.S. insurers) as global systemically important insurers, which will 
be subject to a set of policy measures consistent with the SIFI 
framework.[Footnote 57] Third, FSB, in consultation with IOSCO, has 
developed draft methodologies to identify nonbank, noninsurance G-
SIFIs, which were issued for public consultation in January 2014. 

FSB's Compensation Principles and Standards: 

According to FSB's second progress report issued in August 2013, all 
but two FSB jurisdictions (Argentina and Indonesia) have implemented 
FSB's compensation principles and standards in their national 
regulation or supervisory guidance.[Footnote 58] The principles and 
standards for significant financial institutions include having a 
board remuneration committee as an integral part of their governance 
structure, ensuring that total variable compensation does not limit 
institutions' ability to strengthen their capital base, and providing 
annual reports on compensation to the public on a timely basis. In 
light of the implementation status, FSB concluded that national 
implementation of the principles and standards can be considered 
largely complete and noted that the focus now is on effective 
supervision and oversight of firms. In addition, the report noted that 
while good progress continues to be made, more work needs to be done 
by national authorities and firms to ensure that implementation of the 
FSB principles and standards is effectively leading to more prudent 
risk-taking behavior. The report also noted that there still is some 
way to go before the improvements in compensation practices can be 
deemed effective and sustainable, particularly given the practical 
challenges to embedding risk management in firms' compensation 
practices. 

According to FSB, several authorities noted that firms still were 
expressing some concerns about a level playing field with respect to 
jurisdictions that may not have fully implemented the principles and 
standards. At the same time, FSB noted that national authorities have 
yet to see any real evidence that the implementation of the principles 
and standards has impeded or diminished the ability of supervised 
institutions to recruit and retain talent. In 2012, FSB established 
the bilateral complaint handling process--a mechanism for national 
supervisors from FSB jurisdictions to bilaterally report, verify, and, 
if needed, address specific compensation-related complaints by 
financial institutions based on level playing field concerns. 
According to FSB, no firm had submitted a complaint, as of August 
2013. FSB plans to continue to monitor the implementation of the 
principles and standards.[Footnote 59] 

United States and Other FSB Member Jurisdictions Reported That They 
Have Implemented or Are Implementing Most of the G20 Reform 
Commitments in the Nonpriority Areas: 

The United States and other FSB members reported that they have 
implemented or are in the process of implementing most of the G20 
financial reform commitments in the nonpriority areas. FSB generally 
monitors the implementation of the G20 reforms in the nonpriority 
areas less intensively--primarily through annual surveys of its 
members.[Footnote 60] Specifically, FSB's 2013 survey of its members 
covered the G20 financial reform commitments in the nonpriority areas. 
The data are self-reported by FSB member jurisdictions, and FSB 
generally does not evaluate the survey responses to verify the 
accuracy or assess the effectiveness of implementation. Although the 
priority and nonpriority areas overlap in some areas, the reform 
commitments in the nonpriority areas cover a broader range of sectors 
and functions, including shadow banking, hedge funds, securitization, 
credit rating agencies, financial markets, and supervision.[Footnote 
61] 

As shown on table 6, implementation of the G20 financial reform 
commitments varies by nonpriority reform area. All FSB members 
reported that they implemented or have been implementing 15 of the 
commitments. For example, all members reported making progress in 
implementing commitments to strengthen oversight of shadow banking, 
register hedge funds, regulate credit rating agencies, and enhance 
supervision, accounting standards, and financial consumer protection. 
In contrast, one or more FSB members reported no action to implement 
11 nonpriority commitments, which include strengthening supervisory 
requirements for investment in structured products, enhancing 
disclosure of securitized products, strengthening national deposit 
insurance arrangements, and enhancing market transparency in commodity 
markets. 

Table 6: Implementation Status of the G20 Financial Reform Commitments 
in the Nonpriority Areas as Reported by the United States and Other 
FSB Member Jurisdictions, as of August 2013A: 

G20 Financial Reform Areas and Objectives: Refining the regulatory 
perimeter; 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking; 
United States: Complete; 
FSB members: complete: 18; 
Draft/ongoing: 7; 
No action: 0; 
N/A: 0. 

G20 Financial Reform Areas and Objectives: Hedge funds; 

2. Registration, appropriate disclosures and oversight of hedge 
funds[B]; 
United States: Complete; 
FSB members: complete: 17; 
Draft/ongoing: 5; 
No action: 0; 
N/A: 2. 

3. Establishment of international information sharing framework; 
United States: Draft; 
FSB members: complete:15; 
Draft/ongoing: 3; 
No action: 2; 
N/A: 5. 

4. Enhancing counterparty risk management; 
United States: Complete; 
FSB members: complete: 19; 
Draft/ongoing: 6; 
No action: 0; 
N/A: 0. 

G20 Financial Reform Areas and Objectives: Securitization; 

5. Improving the risk management of securitization; 
United States: Complete; 
FSB members: complete: 20; 
Draft/ongoing: 4; 
No action: 1; 
N/A: 0. 

6. Strengthening of regulatory and capital framework for monolines; 
United States: N/A; 
FSB members: complete: 3; 
Draft/ongoing: 5; 
No action: 0; 
N/A: 17. 

7. Strengthening of supervisory requirements or best practices for 
investment in structured products; 
United States: No Action; 
FSB members: complete: 16; 
Draft/ongoing: 7; 
No action: 2; 
N/A: 0. 

8. Enhanced disclosure of securitized products; 
United States: Complete; 
FSB members: complete: 16; 
Draft/ongoing: 7; 
No action: 2; 
N/A: 0. 

G20 Financial Reform Areas and Objectives: Enhancing supervision; 

9. Consistent, consolidated supervision and regulation of SIFIs; 
United States: Complete; 
FSB members: complete: 18; 
Draft/ongoing: 7; 
No action: 0; 
N/A: 0. 

10. Establishing supervisory colleges and conducting risk assessments; 
United States: Complete; 
FSB members: complete: 16; 
Draft/ongoing: 3; 
No action: 0; 
N/A: 6. 

11. Supervisory exchange of information and coordination; 
United States: Complete; 
FSB members: complete: 20; 
Draft/ongoing: 4; 
No action: 0; 
N/A: 1. 

12. Strengthening resources and effective supervision; 
United States: Complete; 
FSB members: complete: 22; 
Draft/ongoing: 3; 
No action: 0; 
N/A: 0. 

G20 Financial Reform Areas and Objectives: Building and implementing 
macro-prudential frameworks and tools; 

13. Establishing regulatory framework for macro-prudential oversight; 
United States: Complete; 
FSB members: complete: 22; 
Draft/ongoing: 3; 
No action: 0; 
N/A: 0. 

14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments; 
United States: Draft; 
FSB members: complete: 18; 
Draft/ongoing: 6; 
No action: 1; 
N/A: 0. 

15. Improved cooperation between supervisors and central banks; 
United States: Complete; 
FSB members: complete: 22; 
Draft/ongoing: 2; 
No action: 1; 
N/A: 0. 

G20 Financial Reform Areas and Objectives: Improving oversight of 
credit rating agencies; 

16. Enhancing regulation and supervision of CRAs; 
United States: Complete; 
FSB members: complete: 23; 
Draft/ongoing: 2; 
No action: 0; 
N/A: 0. 

17. Reducing the reliance on ratings[C]; 
United States: [Empty]; 
FSB members: complete: [Empty]; 
Draft/ongoing: [Empty]; 
No action: [Empty]; 
N/A: G20 [Empty]. 

G20 Financial Reform Areas and Objectives: Enhancing and aligning 
accounting standards; 

18. Consistent application of high-quality accounting standards; 
United States: Draft; 
FSB members: complete: 23; 
Draft/ongoing: 2; 
No action: 0; 
N/A: 0. 

19. Appropriate application of Fair Value Accounting; 
United States: Complete; 
FSB members: complete: 19; 
Draft/ongoing: 6; 
No action: 0; 
N/A: 0. 

G20 Financial Reform Areas and Objectives: Enhancing risk management; 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks; 
United States: Complete; 
FSB members: complete: 19; 
Draft/ongoing: 6; 
No action: 0; 
N/A: 0. 

21. Efforts to deal with impaired assets and raise additional capital; 
United States: Complete; 
FSB members: complete: 17; 
Draft/ongoing: 5; 
No action: 1; 
N/A: 2. 

22. Enhanced risk disclosures by financial institutions; 
United States: Complete; 
FSB members: complete: 23; 
Draft/ongoing: 2; 
No action: 0; 
N/A: 0. 

G20 Financial Reform Areas and Objectives: Strengthening deposit 
insurance; 

23. Strengthening of national deposit insurance arrangements; 
United States: Draft; 
FSB members: complete: 10; 
Draft/ongoing: 10; 
No action: 2; 
N/A: 3. 

G20 Financial Reform Areas and Objectives: Safeguarding the integrity 
and efficiency of financial markets; 

24. Enhancing market integrity and efficiency; 
United States: Draft; 
FSB members: complete: 12; 
Draft/ongoing: 9; 
No action: 1; 
N/A: 3. 

25. Enhanced market transparency in commodity markets; 
United States: Complete; 
FSB members: complete: 10; 
Draft/ongoing: 9; 
No action: 3; 
N/A: 3. 

26. Legal Entity Identifier; 
United States: Complete; 
FSB members: complete: 11; 
Draft/ongoing: 12; 
No action: 1; 
N/A: 1. 

G20 Financial Reform Areas and Objectives: Enhancing financial 
consumer protection; 

27. Enhancing financial consumer protection; 
United States: Complete; 
FSB members: complete: 15; 
Draft/ongoing: 10; 
No action: 0; 
N/A: 0. 

Source: FSB. 

[A] The data are self-reported by FSB member jurisdictions, and FSB 
generally does not evaluate the survey responses to verify the 
accuracy or assess the effectiveness of implementation. 

[B] United Kingdom did not submit a response. 

[C] FSB did not collect information for its members on this G20 
commitment, because it was conducting a thematic peer review on this 
issue. 

[End of table] 

Table 6 also shows the United States reported that it has taken action 
to implement all but one of the nonpriority G20 reform commitments--
strengthening of supervisory requirements or best practices for 
investment in structured products--and has completely implemented 19 
of the 27 nonpriority reform commitments.[Footnote 62]Japan and South 
Korea reported being the furthest along--completely implementing 23 of 
the 27 nonpriority commitments. Additionally, 21 of the 24 FSB member 
jurisdictions reported having completely implemented 16 or more of the 
nonpriority commitments. 

Although the FSB survey data provide a broad picture of the 
implementation status of the G20 reform commitments in the nonpriority 
areas, the survey and its data have limitations. Importantly, the data 
are self-reported by FSB members. According to an FSB official, the 
FSB Secretariat has followed up bilaterally in a small number of cases 
to collect additional information and clarify certain responses, but 
FSB generally does not evaluate the survey responses to verify the 
accuracy or assess the effectiveness of implementation. As a result, 
the survey findings do not allow straightforward comparisons between 
jurisdictions or across reform areas. Also, some commitments are 
broadly defined and, to an extent, open to interpretation. For 
example, one reform commitment for hedge funds is enhancing 
counterparty risk management, and FSB reported that 19 members 
effectively implemented the reform. One of these members reported 
addressing the issue partly through an annual hedge fund survey; in 
contrast, another member reported adopting legislation and regulation 
to implement the reform. To interpret each G20 reform commitment, FSB 
added a new field in its 2013 survey that identifies the international 
standard associated with a particular reform commitment. 

IMF and FSB Conduct Reviews to Assess Implementation and Effectiveness 
of International Financial Reforms: 

While the Basel Committee conducts reviews of its members (discussed 
earlier), IMF and FSB also have programs to monitor the implementation 
of international financial standards and review the effectiveness of 
the supervision. These programs include IMF and the World Bank's 
Financial Sector Assessment Program (FSAP) and Reports on the 
Observance of Standards and Codes (ROSC) assessments, as well as FSB 
thematic and country peer reviews. 

IMF and the World Bank's FSAP and ROSC: 

FSAP provides the framework for comprehensive and in-depth assessments 
of a country's financial sector. FSAP assessments gauge the stability 
of the financial sector and assess its potential contribution to 
growth.[Footnote 63] Historically, participation in FSAP has been 
voluntary, but in 2010 IMF made financial stability assessments under 
FSAP a mandatory part of the surveillance for members with 
systemically important financial sectors.[Footnote 64] As of November 
2013, IMF has identified 29 jurisdictions, including the United 
States, as having such a sector, in part based on the size and 
interconnectedness of each country's financial sector.[Footnote 65] 
Similarly, following the 2007-2009 financial crisis, the G20 countries 
committed to undergo an FSAP every 5 years. 

For the first time, the United States underwent an FSAP between 2009 
and 2010, when the Dodd-Frank Act was being deliberated and before it 
was enacted.[Footnote 66] The FSAP report discussed, among other 
things, the U.S. experience with and recovery from the recent 
financial crisis, factors that contributed to the crisis, and 
legislative actions being undertaken by the United States to reform 
its financial system. The report included a number of recommendations 
broadly intended to institutionalize and strengthen systemic risk 
oversight; redesign the regulatory architecture; strengthen micro-
prudential regulation and supervision; strengthen oversight of market 
infrastructure; enhance crisis management, resolution, and systemic 
liquidity arrangements; and address too-big-to-fail issues and the 
future of the housing government-sponsored enterprises.[Footnote 67] 
The report recognized that the Dodd-Frank Act was largely consistent 
with the FSAP recommendations but noted effective implementation would 
be key. 

IMF and the World Bank also have a program to assess member compliance 
with international financial sector standards, the results of which 
are summarized in a ROSC. IMF and the World Bank have recognized 
international standards in policy areas identified as key for sound 
financial systems and deserving of priority implementation in 
consideration of a country's circumstances. The standards include 
those developed by the Basel Committee, CPSS, IOSCO, IAIS, IADI, and 
IASB. These assessments are voluntary, even in jurisdictions for which 
an FSAP stability assessment is mandatory. ROSCs can be done on a 
stand-alone basis or as part of an FSAP. For example, the FSAP review 
of the United States included ROSCs covering international banking, 
securities, insurance, clearing, and settlement standards.[Footnote 
68] The assessment of the U.S. supervisory system against 
international codes identified many positive aspects but also some 
important shortcomings.[Footnote 69] 

FSB's Thematic and Country Peer Reviews: 

FSB developed a peer review program in 2010. These reviews are part of 
FSB's efforts to promote financial stability by developing strong 
regulatory, supervisory, and other financial policies and fostering a 
level playing field. Under the FSB charter, member jurisdictions have 
committed to undergo periodic peer reviews. FSB's peer program 
includes two types of reviews: thematic and country. 

Thematic reviews focus on the implementation and effectiveness of FSB-
endorsed international standards deemed important for global financial 
stability. The objectives of the reviews are to encourage consistent 
cross-country and cross-sector implementation, evaluate (where 
possible) the extent to which standards have had their intended 
results, and identify gaps and weaknesses in reviewed areas. As 
previously discussed, FSB has conducted thematic peer reviews in the 
priority reform areas, such as compensation and resolution regimes. It 
also has conducted peer reviews in nonpriority reform areas, including 
the following: 

* The ongoing peer review on credit ratings was assessing FSB member 
progress implementing FSB's Principles for Reducing Reliance on Credit 
Rating Agency Ratings.[Footnote 70] The interim report identified 
several areas where accelerated progress is needed, including the need 
for FSB members to provide incentives to financial institutions to 
develop their own independent credit assessment processes. It also 
identified challenges that need to be addressed, which include 
reducing undue reliance on credit ratings in international standards, 
identifying suitable alternative standards of creditworthiness, and 
addressing constraints in the development of internal risk assessment 
systems. 

* The peer review on risk governance found that national authorities, 
since the crisis, have taken several measures to improve regulatory 
and supervisory oversight of risk governance at financial 
institutions. These measures include developing or strengthening 
existing regulation or guidance, raising supervisory expectations for 
the risk management function, engaging more frequently with the board 
and management, and assessing the accuracy and usefulness of the 
information provided to the board to enable effective discharge of 
their responsibilities.[Footnote 71] It also made four recommendations 
targeting areas in which more substantial work was needed, including 
strengthening regulatory and supervisory guidance, reviewing 
principles for risk governance, and exploring ways to formally assess 
risk culture at financial institutions. 

FSB's country reviews focus on the implementation of international 
standards and their effectiveness nationally. The reviews examine 
steps taken or planned by national authorities to address FSAP and 
ROSC recommendations of IMF and the World Bank. (FSB peer reviews take 
place 2 to 3 years following an FSAP.) Unlike an FSAP, an FSB country 
review does not comprehensively analyze a jurisdiction's financial 
system structure or policies, or its compliance with international 
financial standards. According to an FSB official, both country and 
thematic peer reviews have the inherent limitation of being primarily 
"desktop-based" reviews, which constrains the review team's ability to 
engage in on-site interactions to assess implementation progress, 
challenges, and impact. FSB's peer review handbook notes that country 
peer reviews will include a brief on-site visit in the reviewed 
jurisdiction to meet with the authorities, and subject to the 
agreement of the reviewed jurisdiction, the on-site visit also may 
include meetings with relevant market participants.[Footnote 72] Such 
a visit should support the peer review's objective and be consistent 
with equal treatment of members under the peer review process, and its 
expected benefits should outweigh the resource costs. 

As part of this commitment, the United States volunteered to undergo a 
country peer review in 2013.[Footnote 73] The review found that U.S. 
authorities had made good progress in following up on FSAP 
recommendations, particularly in regard to systemic risk oversight 
arrangements and the supervision and oversight of financial market 
infrastructures. At the same time, the review included recommendations 
targeted at systemic risk oversight arrangements, supervision and 
oversight of financial market infrastructures, and insurance 
supervision. For example, FSB recommended that FSOC develop a more 
systematic, analytical, and transparent macroprudential framework for 
coordinating efforts and incorporating the bottom-up views of member 
agencies to address systemic risk. In addition, FSB recommended that 
FSOC develop a more in-depth and holistic analysis of the systemic 
risks to financial stability. Similarly, in 2012, we reported that 
FSOC's establishment of a Systemic Risk Committee to facilitate 
coordination among its member staffs can help FSOC analyze known 
risks, but the approach does not take full advantage of FSOC member 
agency resources to identify new threats to the financial system. We 
also reported that FSOC identifies a number of potential emerging 
threats to financial stability in its annual reports, but does not use 
a systematic, forward-looking approach to identify such 
threats.[Footnote 74] To address these weaknesses, we recommended, 
among other things, that FSOC develop (1) a monitoring approach that 
includes systematic sharing of key financial risk indicators across 
FSOC members and member agencies to assist in identifying potential 
threats for further monitoring or analysis; and (2) a more systematic, 
forward-looking approach for reporting on potential emerging threats 
to financial stability in annual reports. In its comment letter, 
Treasury stated that officials will carefully consider the report's 
findings and recommendations. As of March 2014, Treasury had taken 
some steps to implement the recommendations, but the recommendations 
had not been fully implemented. 

While FSB noted that federal and state authorities in the United 
States began addressing FSAP recommendations on the insurance sector--
for example, establishing the Federal Insurance Office--it also noted 
that significant additional work is needed. According to FSB, the 
structure and characteristics of insurance supervision in the United 
States--the multiplicity of state regulators, the absence of federal 
regulatory powers to promote greater regulatory uniformity, and the 
limited rights to preempt state law--constrain the federal 
government's ability to ensure regulatory uniformity in this 
sector.[Footnote 75] FSB recommended that the U.S. authorities should 
promote greater regulatory uniformity in the insurance sector, 
including by conferring additional powers and resources at the federal 
level where necessary. 

Jurisdictional Differences and Other Factors May Create Implementation 
Challenges for the G20 Financial Reforms: 

As recognized by regulators, industry associations, and academics, a 
broad range of legal, economic, and political factors can create 
implementation challenges for jurisdictions. For example, differences 
in economic development of countries and differences in philosophy or 
ideology between jurisdictions can make it difficult for the 
international standards to be implemented consistently across 
jurisdictions. Representatives from one industry association told us 
that when standard setting bodies set narrow or detailed principles, 
such principles can become difficult to implement consistently because 
of jurisdictional differences. In addition, legislatures and industry 
groups may support more or less stringent requirements than called for 
by the standards. Finally, domestic regulators may apply or interpret 
the standards differently from other domestic regulators. As discussed 
previously, the Basel Committee's thematic reviews found variation in 
the application of the capital standards across jurisdictions and 
partly attributed the variations to differences in supervisory 
practices. 

As recognized by the G20 leaders, international bodies, industry 
associations, and others, the failure to implement the international 
financial standards consistently across jurisdictions could have a 
number of negative consequences. Most importantly, such 
inconsistencies could hinder or weaken the ability of national 
authorities or international bodies to protect against developments 
affecting national and international financial stability and help 
prevent or mitigate future financial crises. Moreover, a regulator 
stated that inconsistent implementation could lead to an unlevel 
playing field for financial institutions or regulatory arbitrage. For 
example, financial markets or services could migrate to less-regulated 
or unregulated jurisdictions. It also could impose a variety of 
avoidable costs on financial institutions with negative consequences 
for customers, investors, and national and global economies. For 
example, financial institutions operating in multiple jurisdictions 
could be subject to conflicting or duplicative rules and, thus, higher 
compliance costs. 

Some academics and industry associations also have noted that complete 
global consistency across all financial regulations is not necessarily 
possible or preferable. Two academics suggest that if jurisdictions 
face significant limitations in their ability to reach agreement, 
harmonization efforts might lead to agreement on only weak global 
standards.[Footnote 76] An academic we interviewed said that 
harmonized regulations across all jurisdictions may provide a level 
playing field but could be problematic, in part by not providing 
jurisdictions with the flexibility to respond to their differences. He 
also said that standardizing regulations could cause financial 
institutions to behave in the same way and unintentionally concentrate 
risk (e.g., holding the same types of assets). Similarly, an industry 
association noted that international consistency does not require 
uniformity but an appropriate level of similarity, comparability, and 
predictability of regulatory outcomes across jurisdictions.[Footnote 
77] According to the association, international consistency also means 
striking a balance between consistency and the need for sensible local 
differences and supervisory discretion. In light of the potential for 
inconsistent implementation in areas that may result in unnecessary 
negative consequences, the review programs operated by FSB, IMF, and 
international standard-setting bodies likely will play an important 
role in addressing this issue. Indeed, some academics and industry 
associations view FSB's peer reviews as an important mechanism for 
monitoring and encouraging compliance with international financial 
standards. Moreover, one academic suggests that the reviews may help 
deepen commitment to the standards by domestic officials by holding 
member jurisdictions accountable not only to an international body but 
also to each other. However, some express concern about the potential 
effectiveness of FSB peer reviews, in part because any of their 
recommendations, like the international financial standards, are not 
binding. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to CFTC, FDIC, FSB, the Federal 
Reserve, IMF, OCC, SEC, and Treasury, for their review and comment. 
All of the agencies except for the Federal Reserve provided technical 
comments, which we have incorporated, as appropriate. Treasury and SEC 
provided written comments that we have reprinted in appendixes V and 
VI, respectively. 

In commenting on our draft report, Treasury noted that the G20, FSB, 
and international standard-setting bodies have been cooperating since 
the financial crisis on advancing the international financial reform 
agenda and strengthening the global financial system. Treasury further 
noted that the United States has played a leadership role in designing 
and implementing this agenda. Finally, Treasury agreed with the report 
that international reform efforts are not complete. Treasury noted 
that it would continue to work with other regulators to forge high-
quality, compatible rules, encouraging reforms in other jurisdictions 
as strong as those in the United States, and would continue to promote 
greater consistency and convergence. 

SEC noted that it welcomed GAO's review of the international reform 
efforts and valued GAO's perspective in this area. SEC stated that the 
report correctly notes that international standards are not legally 
binding and rely on the decision of national authorities to implement 
the standards (reflecting, among other considerations, appropriate 
respect for national sovereignty). SEC also noted that it was pleased 
that the report acknowledges that while negative consequences can flow 
from varying degrees of implementation of international standards, 
there also can be good reasons behind such differences, such as 
avoiding a movement to less robust standards or the unintentional 
concentration of risks. SEC agrees with the report's discussion that 
there may be reasons to take into account variations in national legal 
and market structures and conditions, including differences in 
economic development and enforcement authority. 

SEC also comments on a number of specific issues in the report. SEC 
noted that it does not share the view that international organizations 
"implement" international standards, nor should they have that 
authority. Our report summarizes the international financial reform 
process, drawing a clear line between the development of international 
standards under the auspices of FSB or standard-setting bodies (or 
both) and the voluntary adoption of rules or policies consistent with 
these standards by jurisdictions, such as through legislation or 
regulations. SEC also noted that interconnections permitted 
disruptions to spread quickly across borders but was unsure that such 
interconnections increased systemic risk as stated in our report. No 
single definition for systemic risk exists, but systemic risk has been 
viewed as the possibility that a single event could broadly affect the 
entire financial system, causing widespread losses rather than just 
losses at one or a few institutions. As we recently reported in 
January 2013, the 2007-2009 financial crisis illustrated the potential 
for systemic risk to be generated and propagated outside of the 
largest financial firms (such as by money market mutual funds), in 
part because of interconnections not only between firms but also 
between markets. SEC also noted the particular status of the 
accounting standard-setting bodies. In particular, both IASB and the 
Financial Accounting Standards Board are independent, private-sector 
organizations. Although the IASB is an FSB member, the legitimacy of 
the accounting standards that these bodies set depends, among other 
things, on those bodies' ability to set accounting standards free from 
political interference. We have added a clarifying note in figure 4 in 
appendix II to reflect this comment. Finally, SEC noted that our 
report uses the term "shadow banking" and it is not appropriate to use 
this term to refer to market-based financing, which serves a credit 
intermediation function. Our report discusses shadow banking, because 
it is one of the G20 financial reform commitments--expanding the 
regulatory perimeter, including strengthening of the regulation and 
oversight of shadow banking. Our report does not define shadow banking 
but rather uses FSB's Policy Framework for Addressing Shadow Banking 
Risks in Securities Lending and Repos (see appendix III, table 7) as a 
reference document. According to FSB, this policy was intended to help 
strengthen oversight and regulation of the shadow banking system. The 
policy notes that the "shadow banking system" can broadly be described 
as "credit intermediation involving entities and activities (fully or 
partially) outside the regular banking system." Therefore, the use of 
the term shadow banking is appropriate for this report. 

We are sending copies of this report to CFTC, FDIC, the Federal 
Reserve, OCC, SEC, and Treasury, interested congressional committees 
and members, and others. This report will also be available at no 
charge on our website at [hyperlink, http://www.gao.gov]. 

Should you or your staff have questions concerning this report, please 
contact me at (202) 512-8678 or clowersa@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Key contributors to this report are 
listed in appendix VII. 

Signed by: 

A. Nicole Clowers: 
Director, Financial Markets and Community Investment: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

This report reviews the (1) U.S. role in the international financial 
reform efforts, including the development of international financial 
standards, and (2) implementation status of recent international 
financial reforms in the United States relative to other jurisdictions 
and challenges or concerns that any uneven progress could present. 

To address the first objective, we reviewed and analyzed declarations, 
communiqués, and other statements issued by the G20 leaders about 
their agreed-to commitments to reform financial regulations. In 
addition, we reviewed and analyzed reports or other documents issued 
since 2008 by various international bodies--including the Financial 
Stability Board (FSB), International Monetary Fund (IMF), Basel 
Committee on Banking Supervision, International Organization of 
Securities Commissions, Committee on Payment and Settlement Systems, 
and International Accounting Standards Board--about their role in 
implementing the G20 reforms, such as through the development of 
international financial standards, or monitoring the implementation 
status of the G20 reforms at the international and jurisdictional 
levels. We also reviewed press statements, policy documents, or other 
material issued by U.S. and other jurisdictions about their work to 
support the G20 financial reforms. We interviewed U.S. financial 
regulatory authorities, including the Commodity Futures Trading 
Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), Board 
of Governors of the Federal Reserve System, Office of the Comptroller 
of the Currency (OCC), Securities and Exchange Commission (SEC), and 
Department of the Treasury--and FSB and IMF officials about their role 
in the G20 reform efforts, including implementation challenges. To 
gain insights about the G20 financial reforms and associated 
implementation challenges, we also reviewed numerous studies by 
academics and other experts and interviewed four professors in the 
fields of law, economics, and political science and two industry 
associations representing banks or over-the-counter (OTC) derivatives 
market participants. We judgmentally selected these parties based on 
studies or other material they issued on the G20's international 
financial reforms, and the results are not generalizable. 

To address the second objective, we reviewed, analyzed, and summarized 
progress reports, peer reviews, surveys, or other material prepared by 
FSB and international bodies, including the Basel Committee on Banking 
Supervision and IMF, on the implementation status of the G20 reforms 
in the priority areas at the jurisdictional level. Similarly, we also 
reviewed and analyzed FSB's annual surveys of its member jurisdictions 
on their implementation status of the G20 reforms in the nonpriority 
areas. We reviewed the accuracy of U.S. responses to questionnaires 
administered by FSB or a standard setting body that covered U.S. 
progress implementing Basel II, 2.5, and III and the G20's OTC 
derivatives reforms, including the requirements for OTC derivatives 
transactions to be centrally cleared, traded on organized trading 
platforms, and reported to trade repositories, and we generally found 
the U.S. responses were accurate. We also asked audit offices of 14 
jurisdictions that are members of FSB--and which are participating in 
an International Organization of Supreme Audit Institutions working 
group on financial reforms--to do the same for their regulators' 
responses. Finally, as identified above, we interviewed officials 
representing U.S. regulators, FSB, IMF, industry associations, and 
academics about challenges or concerns that uneven implementation of 
the G20 financial reforms across jurisdictions could present. 

We conducted this performance audit from March 2013 to April 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: The International Financial Architecture and 
International Bodies: 

As shown in figure 4, a variety of international bodies are part of 
the international financial architecture. 

Figure 4: International Bodies Included in the International Financial 
Architecture: 

[Refer to PDF for image: illustration] 

Financial Stability Board[1]: 

Members of FSB: Government representative-led bodies: 

Multiple sectors: 
* International Monetary Fund; 
* World Bank; 
* Group of 20; 
* Organisation for Economic Co-operation and Development (Standard-
setting body); 
- Financial Action Task Force[B][1] (money laundering) (Standard-
setting body); 
* International Accounting Standards Board (Private sector 
organization) (Standard-setting body): 
- Monitoring Board of the IFRS Foundation[A][1] (Standard-setting 
body). 

Financial sector/central bank: 
* Bank for International Settlements (Central Banks); 
* Committee for the Global Financial System; 
* Committee on Payment and Settlement Systems Standard-setting body). 

Standard-setting bodies, Financial sector: 
* International Association of Deposit Insurers; 
Founding/parent members of Joint Forum, which coordinates on issues of 
common concern: 
* International Association of Insurance Supervisors (insurance); 
* International Organization of Securities Commissions (securities); 
* Basel Committee on Banking Supervision (banking). 

Source: GAO, based on U.S. federal agency information and 
international organization website information. 

Note: This figure is not meant to be comprehensive. Some bodies have 
relationships to one another that are not depicted here. 

[1] Financial sector. 

[A] The Monitoring Board of the IFRS Foundation oversees the work of 
the International Accounting Standards Board (IASB). IASB carries out 
the IFRS Foundation's stated objectives of developing a single set of 
high-quality, understandable, enforceable, and globally accepted 
International Financial Reporting Standards (IFRS). The members of the 
Monitoring Board are the Growth and Emerging Markets Committee of the 
International Organization of Securities Commissions, the Financial 
Services Agency of Japan, the European Commission, and the U.S. 
Securities and Exchange Commission. Additional members of the 
Monitoring Board selected in January 2014 are the Comissão de Valores 
Mobiliários of Brazil and the Financial Services Commission of Korea. 
The Basel Committee on Banking Supervision is an observer. Although 
IASB--an independent, private-sector organization--is an FSB member, a 
US regulator has noted that the legitimacy of the accounting standards 
that IASB sets depends, among other things, on its ability to set 
accounting standards free from political interference. 

[B] The Organisation for Economic Co-operation and Development 
provides secretariat services for the Financial Action Task Force. 

[End of figure] 

In addition to the international bodies discussed in the background 
section of the report (such as the Financial Stability Board, Basel 
Committee on Banking Supervision, International Organization of 
Securities Commissions, International Association of Insurance 
Supervisors, and the International Monetary Fund), other international 
bodies comprising the international financial architecture include the 
following: 

Bank for International Settlements: 

The Bank for International Settlements provides a forum for 
international cooperation among central banks and within financial and 
supervisory communities. Its members as of July 2013 are central banks 
or monetary authorities of 59 economies plus the European Central 
Bank. The Bank for International Settlements acts as a bank for 
central banks; publishes economic and monetary research; and acts as a 
counterparty for central banks in their financial transactions and as 
agent or trustee in connection with international financial 
operations. It also hosts other international financial organizations 
and groups, such as FSB and the Basel Committee. 

Committee on the Global Financial System: 

The Committee on the Global Financial System is a central bank forum 
to monitor issues relating to financial markets and systems. It works 
to identify and assess potential sources of stress in global financial 
markets. 

Financial Action Task Force: 

The Financial Action Task Force is an organization of 36 jurisdictions 
that sets standards and promotes effective implementation of legal, 
regulatory, and operational measures for combating money laundering, 
terrorist financing, and other related threats to the integrity of the 
international financial system. 

Organisation for Economic Co-operation and Development: 

The Organisation for Economic Co-operation and Development is a 
membership organization of 34 countries that promotes economic growth 
and employment among its members, while maintaining financial 
stability. It has cooperated with the G20 in areas related to 
promoting economic growth, and in areas of financial regulation such 
as developing principles on consumer protection. It also is involved 
in global tax standards development. 

The World Bank: 

The World Bank, established in 1944, provides financial and technical 
assistance to developing countries with the goals of ending extreme 
poverty and promoting shared prosperity by fostering income growth of 
the bottom 40 percent of every country. Headquartered in Washington, 
D.C., with 10,000 staff in 120 offices worldwide, the bank provides 
financial assistance products and services and engages in a range of 
knowledge-sharing activities. 

The Monitoring Board of the IFRS Foundation: 

The Monitoring Board of the IFRS Foundation oversees the work of the 
International Accounting Standards Board (IASB). As noted in the 
background section of this report, the IASB carries out the IFRS 
Foundation's stated objectives of developing a single set of high-
quality, understandable, enforceable, and globally accepted accounting 
standards. IASB members are responsible for the development and 
publication of International Financial Reporting Standards (IFRS). The 
members of the Monitoring Board are the Growth and Emerging Markets 
Committee of the International Organization of Securities Commissions, 
the Financial Services Agency of Japan, the European Commission, and 
the U.S. Securities and Exchange Commission. Additional members of the 
Monitoring Board selected in January 2014 are the Comissão de Valores 
Mobiliários of Brazil and the Financial Services Commission of Korea. 
The Basel Committee on Banking Supervision is an observer. 

[End of section] 

Appendix III: Reform Areas and Objectives of the Group of Twenty, 
Standards Developed by International Bodies, and U.S. Agencies' 
Participation: 

The Group of Twenty (G20) leaders have committed to undertake a broad 
range of financial regulatory reforms at the various summits held 
since 2008. The G20 leaders generally have tasked their national 
authorities-
-along with the Financial Stability Board (FSB), standard-setting 
bodies, such as the Basel Committee on Banking Supervision, the 
International Organization of Securities Commissions (IOSCO), 
International Association of Insurance Supervisors (IAIS), and other 
bodies--with converting their broad financial reform commitments into 
more specific standards (including policies, principles, practices, or 
guidance). Although the standards are developed under the auspices of 
FSB or standard setting bodies (or both), the work of many of these 
entities largely is carried out by staff of finance ministries, 
central banks, and financial sector regulators of the member 
institutions. As shown in table 7, various U.S. agencies have 
participated in the development of standards needed to implement the 
G20 reform commitments, and all have been involved in their review. 

Table 7: G20 Reform Objectives, Selected International Standards, and 
U.S. Participation: 

G20 reform area and objective: 1. Banking: 
* Increasing banks' resilience to shocks; 
* Strengthen banks' risk management practices; 
* Strengthening deposit insurance regimes; 

Standard[A]: Basel capital framework, (Basel II, 2.5, III) (standards); 
International body responsible for standard: Basel Committee on 
Banking Supervision (Basel Committee); 
U.S. participant(s) in standard development[B]: 
* Board of Governors of the Federal Reserve System (Federal Reserve 
Board); 
* Federal Deposit Insurance Corporation (FDIC); 
* Federal Reserve Bank of New York; 
* Office of the Comptroller of the Currency (OCC). 

Standard[A]: Core principles for banking supervision (principles); 
International body responsible for standard: Basel Committee; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* OCC. 

Standard[A]: Principles for the supervision of financial conglomerates 
(principles); 
International body responsible for standard: Joint Forum, Basel 
Committee; 
U.S. participant(s) in standard development[B]: * Federal Reserve 
Board; 
* National Association of Insurance Commissioners; 
* ; 
* OCC; 
* Securities and Exchange Commission (SEC). 

Standard[A]: Principles for effective risk data aggregation and risk 
reporting (principles); 
International body responsible for standard: Basel Committee; 
U.S. participant(s) in standard development[B]: 
* Federal Reserve Bank of New York; 
* Federal Reserve Board; 
* OCC. 

Standard[A]: Principles for the sound management of operational risk 
(principles); 
International body responsible for standard: Basel Committee; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* Federal Reserve Bank of Boston; 
* Federal Reserve Bank of New York; 
* Federal Reserve Board; 
* OCC. 

Standard[A]: Principles for sound stress testing practices and 
supervision (principles); 
International body responsible for standard: Basel Committee; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* Federal Reserve Bank of New York; 
* OCC; 
* Office of Thrift Supervision[C]. 

Standard[A]: Core principles for effective deposit insurance systems; 
International body responsible for standard: Basel Committee, 
International Association of Deposit Insurers; 
U.S. participant(s) in standard development[B]: 
* FDIC. 

G20 reform area and objective: 2. Over-the counter (OTC) Derivatives 
markets; 
* Central clearing of all standardized derivative products; 
* Trading on exchanges and electronic trading platforms, where 
appropriate; 
* Mandatory reporting to trade repositories; 
* Higher capital charges for noncentrally cleared derivatives and 
margin requirements for noncentrally cleared derivatives; 

Standard[A]: Principles for financial market infrastructures 
(principles); 
International body responsible for standard: Committee on Payment and 
Settlement Systems (CPSS), International Organization of Securities 
Commissions (IOSCO); 
U.S. participant(s) in standard development[B]: 
* Commodity Futures Trading Commission (CFTC); 
* Federal Reserve Bank of New York; 
* Federal Reserve Board; 
* SEC. 

Standard[A]: Requirements for mandatory clearing; 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* CFTC (Co-chair of Task Force on OTC Derivatives); 
* SEC (Co-chair of Task Force on OTC Derivatives). 

Standard[A]: Report on trading of OTC Derivatives; 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* CFTC (Co-chair of Task Force on OTC Derivatives); 
* SEC (Co-chair of Task Force on OTC Derivatives). 

Standard[A]: Report on OTC derivatives data reporting and aggregation 
requirements; 
International body responsible for standard: CPSS, IOSCO; 
U.S. participant(s) in standard development[B]: 
* CFTC (Co-chair); 
* Federal Reserve Board; 
* Federal Reserve Bank of New York; 
* SEC. 

Standard[A]: Margin requirements for non-centrally cleared derivatives 
(principles); 
International body responsible for standard: Basel Committee, IOSCO; 
U.S. participant(s) in standard development[B]: 
* CFTC; 
* FDIC; 
* Federal Reserve Board; 
* OCC; 
* SEC. 

G20 reform area and objective: 3. Compensation Practices; 

Standard[A]: FSF principles for sound compensation practices 
(principles); 
International body responsible for standard: Financial Stability 
Forum[D]; 
U.S. participant(s) in standard development[B]: 
* Federal Reserve Bank of New York; 
* Federal Reserve Board. 

Standard[A]: Implementing guidance for principles for sound 
compensation practices (guidance); 
International body responsible for standard: Financial Stability Board 
(FSB); 
U.S. participant(s) in standard development[B]: 
* Federal Reserve Board. 

G20 reform area and objective: 4. Systemically Important Financial 
Institutions (SIFIs) and Resolution Regimes; 
* Reducing the moral hazard of SIFIs (i.e. ending "too-big-to-fail"); 

Standard[A]: Reducing the moral hazard posed by systemically important 
financial institutions (recommendations); 
International body responsible for standard: FSB; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* Federal Reserve Board; 
* OCC. 

Standard[A]: Key attributes of effective resolution regimes for 
financial institutions (principles); 
International body responsible for standard: FSB; 
U.S. participant(s) in standard development[B]: 
* CFTC; 
* FDIC; 
* Federal Reserve Bank of New York; 
* OCC; 
* Department of the Treasury (Treasury). 

Standard[A]: Principles for the supervision of financial conglomerates 
(principles); 
International body responsible for standard: Joint Forum; 
U.S. participant(s) in standard development[B]: 
* Federal Reserve Board; 
* OCC; 
* SEC. 

Standard[A]: Policy measures for global systemically important 
financial institutions (including global systemically important banks 
[G-SIBs]) (framework); 
International body responsible for standard: FSB, Basel Committee; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* Federal Reserve Board; 
* OCC; 
* Treasury. 

Standard[A]: Framework for domestic systemically important banks D-
SIBs (principles); 
International body responsible for standard: FSB, Basel Committee; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* Federal Reserve Board; 
* OCC. 

Standard[A]: Framework for global systemically important insurers (G-
SIIs) (principles); 
International body responsible for standard: International Association 
of Insurance Supervisors (IAIS); 
U.S. participant(s) in standard development[B]: 
* Treasury (Federal Insurance Office [FIO]). 

Standard[A]: Insurance core principles (principles); 
International body responsible for standard: IAIS; 
U.S. participant(s) in standard development[B]: 
* Treasury (FIO). 

G20 reform area and objective: 5. Shadow Banking; 
* Expanding the regulatory perimeter including strengthening of the 
regulation and oversight of shadow banking; 

Standard[A]: Policy framework for addressing shadow banking risks in 
securities lending and repos (guidance); 
International body responsible for standard: FSB; 
U.S. participant(s) in standard development[B]: 
* Federal Reserve Board; 
* SEC. 

Standard[A]: Policy framework for strengthening oversight and 
regulation of shadow banking entities (guidance); 
International body responsible for standard: FSB; 
U.S. participant(s) in standard development[B]: 
* Federal Reserve Bank of New York; 
* SEC; 
* Treasury. 

G20 reform area and objective: 6. Hedge funds; 
* Registration, appropriate disclosure, and oversight; 
* International information sharing; 
* Enhancing counterparty risk management; 

Standard[A]: IOSCO report on hedge fund oversight including six high-
level principles on regulation of hedge funds (principles); 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* CFTC; 
* SEC. 

Standard[A]: Capital requirements for bank exposures to central 
counterparties (standards); 
International body responsible for standard: Basel Committee; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* OCC. 

Standard[A]: Basel Committee guidance on banks' interactions with 
highly leveraged institutions (guidance); 
International body responsible for standard: Basel Committee; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* Federal Reserve Bank of New York; 
* Federal Reserve Board; 
* OCC. 

G20 reform area and objective: 7. Securitization; 
* Enhance counterparty risk management; 
* Strengthening of supervisory requirements or best practices for 
investment in structured products; 
* Enhance disclosure of securitized products; 

Standard[A]: IOSCO recommendations in report on global developments in 
securitization regulations (principles); 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* SEC. 

Standard[A]: Enhancements to the Basel II framework (standards); 
International body responsible for standard: Basel Committee; 
U.S. participant(s) in standard development[B]: 
* OCC. 

Standard[A]: Good practices in relation to investment managers´ due 
diligence when investing in structured finance instruments (guidance); 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* SEC. 

Standard[A]: Suitability requirements for distribution of complex 
financial products (guidance); 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* SEC. 

Standard[A]: Principles for ongoing disclosure for asset-backed 
securities (principles); 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* SEC. 

G20 reform area and objective: 8. Macroprudential Frameworks and Tools; 
* Establishing regulatory framework for macroprudential oversight; 
* Enhancing system-wide monitoring and the use of macroprudential 
instruments; 
* Improved cooperation between supervisors and central banks; 

Standard[A]: Operationalizing the selection and application of 
macroprudential instruments (guidance); 
International body responsible for standard: Committee on the Global 
Financial System; 
U.S. participant(s) in standard development[B]: 
* Federal Reserve Bank of New York; 
* Federal Reserve Board. 

Standard[A]: IMF paper on macroprudential policy, an organizing 
framework (guidance); 
International body responsible for standard: International Monetary 
Fund (IMF); 
U.S. participant(s) in standard development[B]: 
* N/A (IMF staff). 

Standard[A]: Good practice principles on supervisory colleges 
(guidance and principles); 
International body responsible for standard: Basel Committee; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* OCC. 

G20 reform area and objective: 9. Credit Rating Agencies (CRA); 
* Enhancing regulation and supervision of CRAs; 
* Reducing reliance on credit ratings; 

Standard[A]: Code of conduct fundamentals for credit rating agencies 
(standard); 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* SEC. 

Standard[A]: Principles for reducing reliance on CRA Ratings 
(principles); 
International body responsible for standard: FSB; 
U.S. participant(s) in standard development[B]: 
* FDIC; 
* SEC. 

G20 reform area and objective: 10. Accounting Standards; 
* Convergence by key global accounting standards bodies; 

Standard[A]: International Financial Reporting Standards (IFRS) 
(standard); 
U.S. Generally Accepted Accounting Principles; 
International body responsible for standard: IFRS Foundation; 
Financial Accounting Foundation; 
U.S. participant(s) in standard development[B]: 
* Financial Accounting Standards Board. 

G20 reform area and objective: 11. Financial Markets; 
* Enhancing market integrity and efficiency; 
* Address risks posed by high frequency trading and dark liquidity; 
* Enhanced market transparency in commodity markets; 

Standard[A]: Report on regulatory issues raised by the impact of 
technological changes on market integrity and efficiency (guidance); 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* SEC. 

Standard[A]: Report on principles for dark liquidity (guidance, 
principles); 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* SEC. 

Standard[A]: Legal entity identifier (standard); 
International body responsible for standard: Legal Entity Identifier 
Regulatory Oversight Committee; 
U.S. participant(s) in standard development[B]: 
* CFTC; 
* FDIC; 
* Federal Reserve Board; 
* OCC; 
* SEC; 
* Treasury (Office of Financial Research, Chair). 

Standard[A]: Principles for the regulation and supervision of 
commodity derivatives markets (principles); 
International body responsible for standard: IOSCO; 
U.S. participant(s) in standard development[B]: 
* CFTC (Co-chair). 

G20 reform area and objective: 12. Consumer Protection; 
Improve consumer finance protection; 
Standard[A]: G20 high-level principles on financial consumer 
protection; 
International body responsible for standard: FSB, Organisation for 
Economic Co-operation and Development (OECD); 
U.S. participant(s) in standard development[B]: 
* Consumer Financial Protection Bureau; 
* Treasury. 

Source: GAO summary of information from U.S. federal agencies and 
international bodies: 

Notes: FSB = Financial Stability Board; Basel Committee = Basel 
Committee on Banking Supervision; IOSCO = International Organization 
of Securities Commissions; IADI = International Association of Deposit 
Insurers; IAIS = International Association of Insurance Supervisors; 
IMF = International Monetary Fund; OECD = Organisation for Economic 
Cooperation and Development. 

[A] Standard refers to standards, guidance, frameworks, and principles. 

[B] U.S. federal agencies review and provide input on all draft 
standards, principles, and other guidance produced by international 
bodies of which they are members or that concern relevant reform 
areas. This column describes U.S. participation on committees or 
working groups developing specific standards. 

[C] The Dodd-Frank Act eliminated the Office of Thrift Supervision, 
which chartered and supervised federally chartered savings 
institutions and savings and loan holding companies. Rulemaking 
authority previously vested in the Office of Thrift Supervision was 
transferred to OCC for savings associations and to the Federal Reserve 
Board for savings and loan holding companies. Supervisory authority 
was transferred to OCC for federal savings associations, to FDIC for 
state savings associations, and to the Federal Reserve Board for 
savings and loan holding companies and their subsidiaries, other than 
depository institutions. 

[D] The Financial Stability Forum was reconstituted as the Financial 
Stability Board by the G20 in 2009. 

[End of table] 

[End of section] 

Appendix IV: Implementation Status of the Group of Twenty's Reform 
Commitments Reported by Select Member Jurisdictions of the Financial 
Stability Board: 

The Financial Stability Board (FSB) is responsible for coordinating 
the implementation of the Group of Twenty's (G20) financial reform 
commitments and reporting implementation progress to the G20. In 
collaboration with standard setting bodies, FSB established a 
framework in 2011 to monitor and report on the implementation of the 
G20 financial reform commitments.[Footnote 78] FSB has selected 
priority reform areas that undergo more intensive monitoring and 
detailed reporting than other reform areas, and the list of priority 
areas is reviewed annually by FSB and revised as needed.[Footnote 79] 
Priority reform areas are selected based on the importance of their 
consistent and comprehensive implementation toward global financial 
stability. For each priority area, an FSB working group or a standard 
setting body is responsible for monitoring implementation progress and 
periodically preparing a progress report.[Footnote 80] Currently, 
FSB's priority areas are (1) the Basel II, 2.5, and III framework; (2) 
OTC derivatives market reforms; (3) compensation practices; (4) policy 
measures for global SIFIs; (5) resolution regimes; and (6) shadow 
banking.[Footnote 81] 

For the G20 financial reform commitments in the nonpriority areas, FSB 
generally monitors their implementation less intensively, primarily 
through annual surveys of its member jurisdictions.[Footnote 82] FSB's 
2013 survey of its member jurisdictions covered 27 G20 financial 
reform commitments. The survey data are self-reported by FSB member 
jurisdictions, and FSB generally does not evaluate the survey 
responses to verify the accuracy or assess the effectiveness of 
implementation. 

Figure 5 provides country profiles that summarize information on the 
implementation status of selected G20 financial reform commitments by 
the 11 countries that are home to global systemically important banks, 
as identified by FSB. The country profiles include information on the 
implementation status of G20 reform commitments in priority and 
nonpriority areas. The profiles also provide examples of how countries 
have implemented certain nonpriority reforms, such as through 
legislative or regulatory changes. These examples are excerpts taken 
from FSB's 2013 surveys completed by the jurisdictions and reflect the 
differences in the approaches taken by the jurisdictions. Finally, 
each profile includes information on a country's population, gross 
domestic product (GDP), and global competitiveness index.[Footnote 83] 

Figure 5: Country Profiles--China: 

[Refer to PDF for image: illustration] 

Key economic indicators: 
Population (millions):	1,344.1; 
GDP (US$ in billions): 8,227.0; 
GDP per capita (US$):	 6,076; 
Global Competitiveness: 
Index 2013-2014 ranking: 29. 

Non-priority area comments: 

Shadow banking: The size and complexity of shadow banking in China is 
relatively low. All Chinese non-bank financial institutions already 
are strictly regulated. In March 2013, the China Banking Regulatory 
Commission released rules on commercial banks' wealth management 
funds' investing in non-standardization credit assets. 

Registration and oversight of hedge funds: China's amendment to the 
Securities Investment Fund law was approved in December 2012. This law 
added a new section on private funds, requiring private fund managers 
to register and report product information. The law also subjects 
private fund managers to fund raising, operation, and disclosure 
standards. 

Supervision and regulation of SIFIs: China's Guidelines on 
Consolidated Banking Supervision provides a comprehensive framework 
for consolidated supervision of banking groups, including the scope, 
elements and methods of consolidated supervision, requirements for 
consolidated supervision of cross-border activities, and guidance on 
banking groups' own management activities on a consolidated basis. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: China): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implemented. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: China): 
Central cleaning: 
Legislation: Proposed; 
Regulation: Proposed; 
Exchange or platform trading: 
Legislation: Adopted; 
Regulation: Adopted; 
Reporting to trade repository: 
Legislation: Adopted; 
Regulation: Adopted; 
Margin: 
Legislation: No Action; 
Regulation: No Action. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: China): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: Yes; 
Authority to restructure and/or wind up financial market 
infrastructures: No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: No. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Complete. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Draft/on-going. 
3. Establishment of international information sharing framework: Not 
applicable. 
4. Enhancing counterparty risk management: Draft/on-going. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Not applicable. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: Complete. 
8. Enhanced disclosure of securitized products: Complete. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Draft/on-going. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: Complete. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Complete. 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Draft/on-going. 
15. Improved cooperation between supervisors and central banks: 
Complete. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: 
17. Reducing the reliance on ratings: Not collected. 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Complete. 
19. Appropriate application of Fair Value Accounting: Complete. 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: Complete. 
21. Efforts to deal with impaired assets and raise additional capital: 
Complete. 
22. Enhanced risk disclosures by financial institutions: Complete. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: Draft/on-
going. 
Safeguarding the integrity and efficiency of financial markets: 
24. Enhancing market integrity and efficiency: Not applicable. 
25. Enhanced market transparency in commodity markets: Complete. 
26. Legal Entity Identifier: Draft/on-going. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Draft/on-going. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 6: Country Profiles-France: 

[Refer to PDF for image: illustration] 

Key economic indicators: 
Population (millions): 65.4; 
GDP (US$ in billions): 2,608.7; 
GDP per capita (US$): 41,141; 
Global Competitiveness: Index 2013-2014 ranking: 23. 

Non-priority area comments: 

Shadow banking: As a general rule, the vast majority of entities 
captured by the Financial Stability Board's definition of shadow 
banking are regulated through prudential rules or the Autorité des 
Marchés Financiers' regulation and supervision. 

Registration and oversight of hedge funds: Depending on the assets 
under management or use of leverage, hedge fund managers must register 
or apply for an authorization. Registered managers must comply with 
minimum reporting requirements, and authorized managers that are 
leveraged on a substantial basis must comply with a wider set of 
reporting requirements. 

Supervision and regulation of SIFIs: France was assessed compliant 
with Basel Core Principle 23 on globally consolidated supervision, and 
Insurance Core Principle 17 on group-wide supervision was considered “
largely observed.” The major French insurers are subject to a 
consolidated supervision. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: France): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implementation ongoing. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: European Union): 
Central cleaning: 
Legislation: Adopted; 
Regulation: Adopted; 
Exchange or platform trading: 
Legislation: Proposed; 
Regulation: No Action; 
Reporting to trade repository: 
Legislation: Adopted; 
Regulation: Adopted; 
Margin: 
Legislation: Adopted; 
Regulation: No Action. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: France): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: Yes; 
Authority to restructure and/or wind up financial market 
infrastructures: Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Yes; 
within EU. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Complete. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Complete. 
3. Establishment of international information sharing framework: 
Complete. 
4. Enhancing counterparty risk management: Complete. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Draft/ongoing. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: Complete. 
8. Enhanced disclosure of securitized products: Complete. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Complete. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: Complete. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Complete. 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Complete. 
15. Improved cooperation between supervisors and central banks: 
Complete. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: Complete. 
17. Reducing the reliance on ratings: Not collected. 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Complete. 
19. Appropriate application of Fair Value Accounting: Complete. 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: Complete. 
21. Efforts to deal with impaired assets and raise additional capital: 
Draft/ongoing. 
22. Enhanced risk disclosures by financial institutions: Complete. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: Complete. 
Safeguarding the integrity and efficiency of financial markets: 
24. Enhancing market integrity and efficiency: Draft/ongoing. 
25. Enhanced market transparency in commodity markets: Draft/ongoing. 
26. Legal Entity Identifier: Complete. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Complete. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 7: Country Profiles-Germany: 

[Refer to PDF for image: illustration] 

Key economic indicators: 
Population (millions): 81.8; 
GDP (US$ in billions): 3,400.6; 
GDP per capita (US$): 41,513; 
Global Competitiveness: Index 2013-2014 ranking: 4. 

Non-priority area comments: 

Shadow banking: Germany has implemented the European Alternative 
Investment Fund Managers Directive into national law. 

Registration and oversight of hedge funds: Germany has in force a 
regulatory framework for hedge funds. This framework sets out 
regulation for managers of hedge funds as well as for hedge funds 
themselves. 

Supervision and regulation of SIFIs: To come into effect, the E.U. 
Capital Requirement Directive IV provisions (finalized in July 2013) 
required a further transposition into national law. The amendments to 
the German ‘Kreditwesengesetz' passed the Federal Council in late June 
2013 and entered into force by January 1, 2014. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: Germany): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implementation ongoing. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: European Union): 
Central cleaning: 
Legislation: Adopted;
Regulation: Adopted;
Exchange or platform trading: 
Legislation: Proposed; 
Regulation: No Action; 
Reporting to trade repository: 
Legislation: Adopted; 
Regulation: Adopted; 
Margin: 
Legislation: Adopted; 
Regulation: No Action. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: Germany): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: No; 
Authority to restructure and/or wind up financial market 
infrastructures: Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Yes, 
within EU. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Draft/ongoing. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Draft/ongoing. 
3. Establishment of international information sharing framework: 
Complete. 
4. Enhancing counterparty risk management: Complete. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Not collected. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: Complete. 
8. Enhanced disclosure of securitized products: Draft/ongoing. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Complete. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: Complete. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Complete. 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Complete. 
15. Improved cooperation between supervisors and central banks: 
Complete. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: Complete. 
17. Reducing the reliance on ratings: Not collected. 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Complete. 
19. Appropriate application of Fair Value Accounting: Complete. 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: Complete. 
21. Efforts to deal with impaired assets and raise additional capital: 
Draft/ongoing. 
22. Enhanced risk disclosures by financial institutions: Complete. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: Complete. 

Safeguarding the integrity and efficiency of financial markets: 
24. Enhancing market integrity and efficiency: Draft/ongoing. 
25. Enhanced market transparency in commodity markets: Complete. 
26. Legal Entity Identifier: Complete. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Complete. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 8: Country Profiles-Italy: 

[Refer to PDF for image: illustration] 

Key economic indicators, 2012: 
Population (millions): 60.7; 
GDP (US$ in billions): 2,014.1; 
GDP per capita (US$): 33,115; 
Global Competitiveness Index 2013-2014 ranking: 49. 

Non-priority area comments: 

Shadow banking: Italy's law requires the Bank of Italy and Commissione 
Nazionale per le Società e la Borsa to review, at least every 3 years, 
the contents of their regulations in order to adapt them to the 
evolution of market conditions and interests of investors. The 
regulatory framework is consistent with the principle that entities 
undertaking similar risks should be subject to the “equivalent 
prudential requirements” integrated with the “proportionality 
criterion.” 

Registration and oversight of hedge funds: Hedge funds managers are 
regulated and supervised in the same way as Undertakings for 
Collective Investment in Transferable Securities managers. Hedge funds 
managers are subject to authorization and must comply with rules on 
general organization, capital adequacy, internal control systems, 
rules of conduct, and conflict of interest. 

Supervision and regulation of SIFIs: The Bank of Italy's prudential 
regulations already take the systemic importance of supervised 
financial institutions into account, according to a proportionality 
criterion. In the context of Basel II Pillar 2, institutions deemed as 
systemically important are subject to more stringent prudential 
requirements than other intermediaries, especially for risk control 
and measurement procedures and corporate governance. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: Italy): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implementation ongoing. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: European Union): 
Central cleaning: 
Legislation: Adopted; 
Regulation: Adopted; 
Exchange or platform trading: 
Legislation: Proposed; 
Regulation: No Action; 
Reporting to trade repository: 
Legislation: Adopted; 
Regulation: Adopted; 
Margin: 
Legislation: Adopted; 
Regulation: No Action. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: Italy): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: Yes; 
Authority to restructure and/or wind up financial market 
infrastructures: Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Yes, 
within EU; 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Complete. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Complete. 
3. Establishment of international information sharing framework: 
Complete. 
4. Enhancing counterparty risk management: Draft/ongoing. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Complete. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: No Action. 
8. Enhanced disclosure of securitized products: Draft/ongoing. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Complete. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: Complete. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: No Action. 
15. Improved cooperation between supervisors and central banks: 
Draft/ongoing. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: Complete. 
17. Reducing the reliance on ratings: Not Collected. 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Complete. 
19. Appropriate application of Fair Value Accounting: Complete. 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: 
Draft/ongoing. 

21. Efforts to deal with impaired assets and raise additional capital: 
Complete. 
22. Enhanced risk disclosures by financial institutions: Complete. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: No 
Action. 

Safeguarding the integrity and efficiency of financial markets: 
24. Enhancing market integrity and efficiency: Complete. 
25. Enhanced market transparency in commodity markets: Complete. 
26. Legal Entity Identifier: Draft/ongoing. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Complete. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 9: Country Profiles-Japan: 

[Refer to PDF for image: illustration] 

Key economic indicators, 2012: 
Population (millions): 127.8; 
GDP (US$ in billions): 5,964.0; 
GDP per capita (US$): 46,736; 

Global Competitiveness Index 2013-2014 ranking: 9. 

Non-priority area comments: 

Shadow banking: Japan participates proactively in international 
discussions on shadow banking in the Financial Stability Board and 
International Organization of Securities Commissions. 

Registration and oversight of hedge funds: Managers who use the same 
style of investment management as hedge funds are now subject to 
registration as discretionary investment managers and investment trust 
managers under the Financial Instruments and Exchange Act. On January 
21, 2010, the Financial Supervisory Authority published the 
“Development of Institutional Frameworks Pertaining to Financial and 
Capital Markets,” which includes measures to expand coverage of 
registration to some types of foreign investment entrustments, 
including foreign hedge funds. 

Supervision and regulation of SIFIs: In February 2013, the Financial 
Supervisory Authority published a new supervisory guideline, which 
clarifies that the recovery and resolution plans for global 
systemically important banks and, as necessary, other financial 
institutions that could have an impact on financial stability in the 
event of their failure should be developed at least annually. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: Japan): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implemented. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: Japan): 
Central cleaning: 
Legislation: Adopted; 
Regulation: Effective; 
Exchange or platform trading: 
Legislation: Adopted; 
Regulation: No Action; 
Reporting to trade repository: 
Legislation: Adopted; 
Regulation: Effective; 
Margin: 
Legislation: No Action; 
Regulation: No Action. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: Japan): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: No; 
Authority to restructure and/or wind up financial market 
infrastructures: No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Yes. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Draft/ongoing. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Complete. 
3. Establishment of international information sharing framework: 
Complete. 
4. Enhancing counterparty risk management: Complete. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Not applicable. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: Complete. 
8. Enhanced disclosure of securitized products: Complete. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Complete. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: Complete. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Complete. 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Complete. 
15. Improved cooperation between supervisors and central banks: 
Complete. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: Complete. 
17. Reducing the reliance on ratings: Not collected. 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Complete. 
19. Appropriate application of Fair Value Accounting: Complete. 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: Complete. 
21. Efforts to deal with impaired assets and raise additional capital: 
Complete. 
22. Enhanced risk disclosures by financial institutions: Complete. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: Complete. 

Safeguarding the integrity and efficiency of financial markets: 
24. Enhancing market integrity and efficiency: Complete. 
25. Enhanced market transparency in commodity markets: Complete. 
26. Legal Entity Identifier: Draft/ongoing. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Complete. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 10: Country Profiles-Netherlands: 

[Refer to PDF for image: illustration] 

Key economic indicators, 2012: 
Population (millions): 16.7; 
GDP (US$ in billions): 773.1; 
GDP per capita (US$): 46,142; 
Global Competitiveness Index 2013-2014 ranking: 8. 

Non-priority area comments: 

Shadow banking: The Dutch central bank has identified and plotted 
shadow banking activities in the Netherlands in an occasional paper 
and is open to consider proposals to further regulate shadow banking 
provided that real benefits of shadow banking are kept. 

Registration and oversight of hedge funds: In July 2011, the European 
Alternative Investment Fund Managers Directive was published. The 
Netherlands has implemented this directive as of July 2013. 

Supervision and regulation of SIFIs: Netherlands is working on 
recovery and resolution plans, has set up crisis management groups for 
the systemically important banks, and is working on harmonizing the 
resolution regime in the European context. The Netherlands largely 
complies with the Principles for the Supervision of Financial 
Conglomerates of 2012. Any new elements included in the 2012 
principles in comparison to the 1999 principles will be implemented in 
Netherlands legislation as soon as a revision of the EU Directive 
takes account of those elements. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: Netherlands): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implementation ongoing. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: European Union): 
Central cleaning: 
Legislation: Adopted; 
Regulation: Adopted; 
Exchange or platform trading: 
Legislation: Proposed; 
Regulation: No Action; 
Reporting to trade repository: 
Legislation: Adopted; 
Regulation: Adopted; 
Margin: 
Legislation: Adopted; 
Regulation: No Action. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: Netherlands): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: Yes; 
Authority to restructure and/or wind up financial market 
infrastructures: Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Yes, 
within EU. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Complete. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Complete. 
3. Establishment of international information sharing framework: 
Complete. 
4. Enhancing counterparty risk management: Complete. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Not applicable. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: Complete. 
8. Enhanced disclosure of securitized products: Complete. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Complete. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: 
Draft/ongoing. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Complete. 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Complete. 
15. Improved cooperation between supervisors and central banks: 
Complete. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: Complete. 
17. Reducing the reliance on ratings: 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Complete. 
19. Appropriate application of Fair Value Accounting: Draft/ongoing. 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: Complete. 
21. Efforts to deal with impaired assets and raise additional capital: 
Complete. 
22. Enhanced risk disclosures by financial institutions: Complete. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: Complete. 

Safeguarding the integrity and efficiency of financial markets: 
24. Enhancing market integrity and efficiency: Draft/ongoing. 
25. Enhanced market transparency in commodity markets: Draft/ongoing. 
26. Legal Entity Identifier: Complete. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Complete. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 11: Country Profiles-Spain: 

[Refer to PDF for image: illustration] 

Key economic indicators, 2012:
Population (millions): 46.2; 
GDP (US$ in billions): 1,352.1; 
GDP per capita (US$): 29,289; 
Global Competitiveness Index 2013-2014 ranking: 35. 

Non-priority area comments: 

Shadow banking: Spanish regulation already is wide in its perimeter. 
Spanish authorities are participating in international and European 
projects to strengthen the regulation and oversight of the shadow 
banking system. 

Registration and oversight of hedge funds: Spain has fully implemented 
domestic hedge funds regulations. While the level of hedge fund 
activity in Spain is rather low, implemented regulation in Spain on 
hedge funds already requires mandatory registration of both managers 
and hedge funds themselves. 

Supervision and regulation of SIFIs: For regulation on SIFIs, the 
Capital Requirement Directive IV text includes a mandatory systemic 
risk buffer of common equity Tier 1 (CET1) capital for banks that are 
identified by the competent authority as globally systemically 
important institutions. The mandatory surcharge will be between 1 and 
3.5 percent CET 1 and apply from January 1, 2016, onwards. The 
identification criteria follow the Basel Committee's framework for 
global systemically important banks. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: Spain): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implementation ongoing. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: European Union): 
Central cleaning: 
Legislation: Adopted; 
Regulation: Adopted; 
Exchange or platform trading: 
Legislation: Proposed; 
Regulation: No Action; 
Reporting to trade repository: 
Legislation: Adopted; 
Regulation: Adopted; 
Margin: 
Legislation: Adopted; 
Regulation: No Action. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: Spain): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: Yes; 
Authority to restructure and/or wind up financial market 
infrastructures: No; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Yes. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Draft/ongoing. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Complete. 
3. Establishment of international information sharing framework: 
Complete. 
4. Enhancing counterparty risk management: Complete. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Not applicable. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: Complete. 
8. Enhanced disclosure of securitized products: Complete. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Complete. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: Complete. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Complete. 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Draft/ongoing. 
15. Improved cooperation between supervisors and central banks: 
Complete. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: Complete. 
17. Reducing the reliance on ratings: Not collected. 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Complete. 
19. Appropriate application of Fair Value Accounting: Complete. 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: 
Draft/ongoing. 
21. Efforts to deal with impaired assets and raise additional capital: 
Draft/ongoing. 
22. Enhanced risk disclosures by financial institutions: Complete. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: Not 
applicable. 

Safeguarding the integrity and efficiency of financial markets: 

24. Enhancing market integrity and efficiency: Draft/ongoing. 
25. Enhanced market transparency in commodity markets: Draft/ongoing. 
26. Legal Entity Identifier: Complete. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Draft/ongoing. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 12: Country Profiles-Sweden: 

[Refer to PDF for image: illustration] 

Key economic indicators, 2012: 
Population (millions): 9.4; 
GDP (US$ in billions): 526.2; 
GDP per capita (US$): 55,158; 
Global Competitiveness Index 2013-2014 ranking: 6. 

Non-priority area comments: 

N/A -- Sweden is not a member of the Financial Stability Board and, 
thus, is not covered by the Financial Stability Board's monitoring 
activities. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: Sweden): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implementation ongoing. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

Central cleaning: 
Legislation: Not applicable; 
Regulation: Not applicable; 
Exchange or platform trading: 
Legislation: Not applicable; 
Regulation: Not applicable; 
Reporting to trade repository: 
Legislation: Not applicable; 
Regulation: Not applicable; 
Margin: 
Legislation: Not applicable; 
Regulation: Not applicable. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013: 
Authority to restructure and/or wind up banks: Not applicable; 
Authority to restructure and/or wind up insurers: Not applicable; 
Authority to restructure and/or wind up securities or investment 
firms: Not applicable; 
Authority to restructure and/or wind up financial market 
infrastructures: Not applicable; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Not 
applicable. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Not applicable. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Not applicable; 
3. Establishment of international information sharing framework: Not 
applicable; 
4. Enhancing counterparty risk management: Not applicable; 

Securitization: 

5. Improving the risk management of securitization: Not applicable; 
6. Strengthening of regulatory and capital framework for monolines: 
Not applicable; 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: Not applicable; 
8. Enhanced disclosure of securitized products: Not applicable; 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: Not 
applicable; 
10. Establishing supervisory colleges and conducting risk assessments: 
Not applicable; 
11. Supervisory exchange of information and coordination: Not 
applicable; 
12. Strengthening resources and effective supervision: Not applicable; 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Not applicable; 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Not applicable; 
15. Improved cooperation between supervisors and central banks: Not 
applicable; 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: Not applicable; 
17. Reducing the reliance on ratings: Not applicable; 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: Not 
applicable; 
19. Appropriate application of Fair Value Accounting: Not applicable; 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: Not 
applicable; 
21. Efforts to deal with impaired assets and raise additional capital: 
Not applicable; 
22. Enhanced risk disclosures by financial institutions: Not 
applicable; 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: Not 
applicable; 

Safeguarding the integrity and efficiency of financial markets: 

24. Enhancing market integrity and efficiency: Not applicable; 
25. Enhanced market transparency in commodity markets: Not applicable; 
26. Legal Entity Identifier: Not applicable; 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Not applicable; 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 13: Country Profiles-Switzerland: 

[Refer to PDF for image: illustration] 

Key economic indicators, 2012: 
Population (millions): 7.9; 
GDP (US$ in billions): 632.4; 
GDP per capita (US$): 79,033; 
Global Competitiveness Index 2013-2014 ranking: 1. 

Non-priority area comments: 

Shadow banking: The Swiss revised the Collective Investment Schemes 
Act to extend the supervisory scope to include asset managers of 
foreign collective investment schemes. The prime brokerage activities 
of the Swiss banks are subject to constant supervision. Finance 
companies related to regulated banks also are subject to supervision. 
Switzerland has no constant net asset value money market funds. 
Mortgage insurance is not offered in Switzerland. 

Registration and oversight of hedge funds: In regard to hedge funds, 
the Swiss Financial Market Supervisory Authority has participated in 
the systemic footprint survey in September 2010 to identify 
systemically relevant hedge fund activities. Switzerland applies both 
a direct and an indirect supervisory approach with respect to hedge 
funds. 

Supervision and regulation of SIFIs: Switzerland currently has two 
designated global systemically important banks that are subject to 
additional requirements regarding capital, risk diversification, and 
emergency planning. It has implemented resolution plans and crisis 
management colleges in accordance with the Financial Stability Board 
timetable. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: Switzerland): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implemented. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: Switzerland): 
Central cleaning: 
Legislation: Consultation; 
Regulation: No Action; 
Exchange or platform trading: 
Legislation: Consultation; 
Regulation: No Action; 
Reporting to trade repository: 
Legislation: Partially adopted; 
Regulation: No Action; 
Margin: 
Legislation: Consultation; 
Regulation: No Action. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: Switzerland): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: Yes; 
Authority to restructure and/or wind up financial market 
infrastructures: Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Yes. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Complete. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Complete. 
3. Establishment of international information sharing framework: 
Complete. 
4. Enhancing counterparty risk management: Complete. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Not applicable. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: Draft/ongoing. 
8. Enhanced disclosure of securitized products: No action. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Complete. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: Complete. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Complete. 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Complete. 
15. Improved cooperation between supervisors and central banks: 
Complete. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: 
17. Reducing the reliance on ratings: Not collected. 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Complete. 
19. Appropriate application of Fair Value Accounting: Draft/ongoing. 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: Complete. 
21. Efforts to deal with impaired assets and raise additional capital: 
Complete. 
22. Enhanced risk disclosures by financial institutions: Complete. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: Complete. 

Safeguarding the integrity and efficiency of financial markets: 

24. Enhancing market integrity and efficiency: Draft/ongoing. 
25. Enhanced market transparency in commodity markets: Draft/ongoing. 
26. Legal Entity Identifier: Draft/ongoing. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Draft/ongoing. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 14: Country Profiles-United Kingdom (UK): 

[Refer to PDF for image: illustration] 

Key economic indicators, 2012: 
Population (millions): 62.7; 
GDP (US$ in billions): 2,440.5; 
GDP per capita (US$): 38,589; 
Global Competitiveness Index 2013-2014 ranking: 10. 

Non-priority area comments: 

Shadow banking: The Financial Policy Committee (on a statutory basis 
from 2013) can make recommendation to Treasury regarding the 
regulatory perimeter. It also may make recommendations to the 
Prudential Regulatory Authority and Financial Conduct Authority for 
entities within the regulatory perimeter. 

Registration and oversight of hedge funds: Hedge fund managers already 
are subject to supervision. In addition, the Financial Conduct 
Authority undertakes a biannual survey of hedge fund managers to help 
assess potential systemic risks to financial stability from hedge 
funds. 

Supervision and regulation of SIFIs: The Prudential Regulation 
Authority exercises groupwide supervision on a sectoral and cross-
sectoral (financial conglomerate) basis in accordance with relevant EU 
Directives and with the principles set by the international standard 
setting bodies. The Capital Requirements Directive (i.e., the EU 
implementation of Basel III) includes a requirement on member states 
to identify and impose additional common equity tier 1 capital on 
global systemically important banks and other systemically important 
institutions. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: UK): 

Basel II: Implemented; 
Basel 2.5: Implemented; 
Basel III: Implementation ongoing. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: UK): 
Central cleaning: 
Legislation: Adopted; 
Regulation: Adopted; 
Exchange or platform trading: 
Legislation: Proposed; 
Regulation: No Action; 
Reporting to trade repository: 
Legislation: Adopted; 
Regulation: Adopted; 
Margin: 
Legislation: Adopted; 
Regulation: No Action. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: European Union): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: Yes; 
Authority to restructure and/or wind up financial market 
infrastructures: Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Yes. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Complete. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Not provided. 
3. Establishment of international information sharing framework: 
Draft/ongoing. 
4. Enhancing counterparty risk management: Complete. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Draft/ongoing. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: Complete. 
8. Enhanced disclosure of securitized products: Complete. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Complete. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: Complete. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Complete. 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Complete. 
15. Improved cooperation between supervisors and central banks: 
Complete. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: Complete. 
17. Reducing the reliance on ratings: Not collected. 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Complete. 
19. Appropriate application of Fair Value Accounting: 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: Complete. 
21. Efforts to deal with impaired assets and raise additional capital: 
Draft/ongoing. 
22. Enhanced risk disclosures by financial institutions: Draft/ongoing. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: Complete. 

Safeguarding the integrity and efficiency of financial markets: 

24. Enhancing market integrity and efficiency: Complete. 
25. Enhanced market transparency in commodity markets: Draft/ongoing. 
26. Legal Entity Identifier: Draft/ongoing. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Draft/ongoing. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

Figure 15: Country Profiles-United States (US): 

[Refer to PDF for image: illustration] 

Key economic indicators, 2012: 
Population (millions): 311.6; 
GDP (US$ in billions): 15,684.8; 
GDP per capita (US$): 49,922; 
Global Competitiveness Index 2013-2014 ranking: 5. 

Non-priority area comments: 

Shadow banking: The Financial Stability Oversight Council has 
authority to expand the U.S. regulatory perimeter by designating the 
largest, most interconnected nonbank firms for heightened prudential 
standards and supervision by the Federal Reserve. On April 11, 2012, 
it published a final rule and interpretive guidance regarding the 
criteria and process for designating nonbank financial firms. 

Registration and oversight of hedge funds: Registration of hedge fund 
managers in force. Data were collected from the largest managers 
first, then from all managers by April 30, 2013. 

Supervision and regulation of SIFIs: The Dodd-Frank Act modifies the 
U.S. regulatory framework by creating the Financial Stability 
Oversight Council, chaired by the Secretary of the Treasury, with the 
authority to designate nonbank financial firms whose failure could 
threaten the stability of the U.S. financial system and to require 
these firms be subject to heightened prudential standards and 
supervision by the Federal Reserve. 

Implementation status of Basel Framework by Members of the Basel 
Committee as of August 2013 (Jurisdiction: US): 

Basel II: Implementation ongoing; 
Basel 2.5: Implementation ongoing; 
Basel III: Implementation ongoing. 

Implementation Status of the G20 OTC Derivatives Reforms by FSB Member 
Jurisdictions as of September 2013: 

(Jurisdiction: ): 
Central cleaning: 
Legislation: Adopted; 
Regulation: Partially effective; 
Exchange or platform trading: 
Legislation: Adopted; 
Regulation: Partially effective; 
Reporting to trade repository: 
Legislation: Adopted; 
Regulation: Partially effective; 
Margin: 
Legislation: Adopted; 
Regulation: Proposed. 

Select Features of Resolution Regimes in FSB Jurisdictions as of April 
2013 (Jurisdiction: US): 
Authority to restructure and/or wind up banks: Yes; 
Authority to restructure and/or wind up insurers: Yes; 
Authority to restructure and/or wind up securities or investment 
firms: Yes; 
Authority to restructure and/or wind up financial market 
infrastructures: Yes; 
Are there legal provisions or policies that mandate or strongly 
encourage cross-border cooperation of resolution authority: Yes. 

Status of Implementation of G20/FSB recommendations by member 
jurisdictions, self-reported in IMN 2013 Survey: 

Refining the regulatory perimeter: 

1. Review of boundaries of the regulatory framework including 
strengthening oversight of shadow banking: Complete. 

Hedge Funds: 

2. Registration, appropriate disclosures and oversight of hedge funds: 
Complete. 
3. Establishment of international information sharing framework: 
Draft/ongoing. 
4. Enhancing counterparty risk management: Complete. 

Securitization: 

5. Improving the risk management of securitization: Complete. 
6. Strengthening of regulatory and capital framework for monolines: 
Not applicable. 
7. Strengthening of supervisory requirements or best practices for 
investment in structured products: No action. 
8. Enhanced disclosure of securitized products: Complete. 

Enhancing Supervision: 

9. Consistent, consolidated supervision and regulation of SIFIs: 
Complete. 
10. Establishing supervisory colleges and conducting risk assessments: 
Complete. 
11. Supervisory exchange of information and coordination: Complete. 
12. Strengthening resources and effective supervision: Complete. 

Building and implementing macro-prudential frameworks and tools: 

13. Establishing regulatory framework for macro-prudential oversight: 
Complete. 
14. Enhancing system-wide monitoring and the use of macro-prudential 
instruments: Draft/ongoing. 
15. Improved cooperation between supervisors and central banks: 
Complete. 

Improving oversight of credit rating agencies: 

16. Enhancing regulation and supervision of CRAs: Complete. 
17. Reducing the reliance on ratings: Not collected. 

Enhancing and aligning accounting standards: 

18. Consistent application of high-quality accounting standards: 
Draft/ongoing. 
19. Appropriate application of Fair Value Accounting: Complete. 

Enhancing risk management: 

20. Enhancing guidance to strengthen banks' risk management practices, 
including on liquidity and foreign currency funding risks: Complete. 
21. Efforts to deal with impaired assets and raise additional capital: 
Complete. 
22. Enhanced risk disclosures by financial institutions: Complete. 

Strengthening deposit insurance: 

23. Strengthening of national deposit insurance arrangements: 
Draft/ongoing. 

Safeguarding the integrity and efficiency of financial markets: 

24. Enhancing market integrity and efficiency: Draft/ongoing. 
25. Enhanced market transparency in commodity markets: Complete. 
26. Legal Entity Identifier: Complete. 

Enhancing financial consumer protection: 

27. Enhancing financial consumer protection: Complete. 

Sources: Financial Stability Board, Basel Committee on Banking 
Supervision, and World Economic Forum. 

[End of figure] 

[End of section] 

Appendix V: Comments from the Department of the Treasury: 

Department of The Treasury: 
Washington, D.C. 

March 24, 2014: 

Ms. A. Nicole Clowers: 
Director, Financial Markets and Community Investment: 
Government Accountability Office: 
441 G Street NW: 
Washington, D.C. 20548: 

Dear Ms. Clowers: 

We thank the Government Accountability Office staff for its study 
"International Financial Regulatory Reforms." This report details the 
strong record of accomplishment on international financial regulatory 
reforms since the onset of the financial crisis, including the many 
actions taken internationally to strengthen the resilience of the 
global financial system and enhance the Financial Stability Board 
(FSB) so it could play a critical role in advancing the agenda. 

As your report well underscores, the G-20, the FSB, and the 
international standard-setting bodies have cooperated closely in this 
endeavor. They have put together a string of accomplishments -
agreement on Basel III, a common definition of capital and more 
recently the leverage ratio, capital surcharges for global 
systemically important banks, and beginning to end the opacity of
the over-the-counter derivatives market by calling for central 
clearing, reporting, and more transparent trading requirements. The 
FSB is working to facilitate cross-border arrangements to
resolve large global financial institutions, including through its 
development of the international resolution standard, the Key 
Attributes of Effective Resolution Regimes for Financial Institutions. 

The United States has played a leadership role in designing and 
implementing the international financial regulatory agenda, 
positioning the G-20 to shape the international regulatory reform
agenda, and boosting the role of the FSB. In addition, the United 
States set an example for the world through our innovative stress 
tests in 2009 and enacting the Dodd-Frank Act in 2010. Indeed, many 
aspects of the Dodd-Frank Act and the international agenda are closely 
aligned, reflecting the tireless work of our regulators, despite 
sometimes severe resource constraints. 

Finally, as the report rightfully notes, our work is not done. As 
Secretary Lew has stated, we will continue working with other 
regulators to forge high quality, compatible rules, encouraging
reforms in other jurisdictions that are as strong as our own. Treasury 
will continue to promote greater consistency and convergence, and a 
race to the top. 

Thank you for the GAO's fine work in highlighting the strong and 
ambitious efforts made since the crisis to advance international 
financial regulatory reform. 

Sincerely, 

Signed by: 

Mark Sobel: 

[End of section] 

Appendix VI: Comments from the Securities and Exchange Commission: 

United States Securities and Exchange Commission: 
Office of International Affairs: 
Washington, D.C. 20549: 

March 21, 2014: 

Via Email: 

A. Nicole Clowers: 
Director, Financial Markets and Community Investment: 
United States Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Clowers: 

Thank you for the opportunity to review and comment on the draft 
report entitled, "International Financial Regulatory Reforms: U.S. and 
Other Jurisdictions' Efforts to Develop and Implement Reforms" (GAO-14-
261). We are also grateful for your staffs consideration of our views 
in the development of this report. SEC staff welcomes GAO's review of 
the U.S. role in international reform efforts and the GAO's 
examination of the status of implementation of those reforms. As
one of the national authorities with responsibility for those reforms, 
we value GAO's perspective in this area. 

With G-20 leadership, the FSB is making valuable contributions to the 
process of enhancing international cooperation on financial 
regulation, particularly with regard to promoting coordination and 
information exchange among authorities responsible for financial 
stability and encouraging the work of the international standard-
setting bodies. As the report correctly notes, for instance in its 
discussion of the "International Financial Architecture," 
international standards are not legally binding and rely on the 
decision of national authorities to implement these standards, 
reflecting, among other considerations, appropriate respect for 
national sovereignty. For that reason, we do not share the view that 
international organizations "implement" international standards, nor 
should they have that authority. Rather, while the international
organizations develop guidelines and standards, the national 
authorities determine whether and how to implement them. 

As you know, the Securities and Exchange Commission (like the 
Commodity Futures Trading Commission) is an independent agency that 
has a statutory obligation to engage in its own processes for input 
and deliberation. The outcome of those processes may differ from the
international standard-setting bodies' recommendations due to 
challenges discussed in the report, such as time or resource 
constraints, or the differences simply may be a product of assigning
those functions to independent agencies and those agencies' judgments 
in the execution of their respective mandates. Thus, here, as 
elsewhere, a lack of consistent implementation of international 
standards across jurisdictions may represent a reasoned choice and/or 
legal obligations or constraints within the individual jurisdictions. 

We are pleased that the report acknowledges that while negative 
consequences can flow from varying degrees of implementation of 
international standards, there also can be good reasons behind such 
differences, such as avoiding a movement to less robust standards or the
unintentional concentration of risks. We agree with the discussion in 
the report that there may well be reasons to take into account 
variations in national legal and market structures and conditions, 
including differences in economic development and enforcement 
authority. There can be value in allowing individual jurisdictions to 
have the flexibility to respond to these differences. 

Identifying appropriate departures from international standards versus 
unnecessary deviations with negative consequences can be difficult, 
but is of critical importance. While the peer review programs of the 
various international standard-setting organizations undoubtedly 
should take them into account, any suggestion that those processes 
should have greater binding affect ignores the inherent limitations in 
those processes and runs the risk of undermining the central premises
of national regulation and sovereignty. 

We also note a few more specific points. The report states that cross-
border interconnections increased systemic risk, but we are not sure 
that is the case. It is certainly the case, however, that 
interconnections permitted disruptions to spread quickly across 
borders. 

With regard to the chart providing a picture of selected international 
bodies, it is worth noting the particular status of the accounting 
standard-setting bodies. Both the International Accounting Standards 
Board (IASB) and the Financial Accounting Standards Board (FASB) are
independent, private-sector organizations. Although the IASB is an FSB 
member, the legitimacy of the accounting standards that these bodies 
set depends, among other things, on those bodies' ability to set 
accounting standards free from political interference. 

Finally, we note that the term "shadow banking" is used in your 
report. We do not believe it is appropriate to use this term to refer 
to market-based financing which serves a credit intermediation 
function. Aside from the inappropriately ominous word choice, which 
has gained wide usage in other settings, the phrase tends to imply 
that activities so labeled should be analyzed in the same manner as 
banking, with similar regulatory tools necessarily to be applied
to issues raised by this financing mechanism. We disagree with that 
implication. 

Thank you once again for the opportunity to review and comment on the 
draft report. 

Sincerely, 

Signed by: 

Paul Leder: 
Director: 

[End of section] 

Appendix VII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

A. Nicole Clowers, (202) 512-8678, clowersa@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Richard Tsuhara (Assistant 
Director), Rudy Chatlos, Catherine Gelb, Camille Keith Jennings, 
Thomas McCool, Thomas Melito, Marc Molino, Akiko Ohnuma, Barbara 
Roesmann, and Jessica Sandler made key contributions to this report. 

[End of section] 

Footnotes: 

[1] See, for example, GAO, Financial Regulatory Reform: Financial 
Crisis Losses and Potential Impacts of the Dodd-Frank Act, [hyperlink, 
http://www.gao.gov/products/GAO-13-180] (Jan. 16, 2013). 

[2] Pub. L. No. 111-203, 124 Stat. 1376 (2010). 

[3] The G20, established in 1999, is a forum for international 
cooperation on important issues of the global economic and financial 
agenda. Its members are Argentina, Australia, Brazil, Canada, China, 
France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi 
Arabia, South Africa, South Korea, Turkey, United Kingdom, United 
States, and the European Union. See the background section of this 
report for a more detailed discussion of the G20. 

[4] The Financial Stability Forum was founded in 1999 by the G7 
finance ministers and central bank governors. In 2008 the G20 leaders 
called for a larger membership of the Financial Stability Forum and re-
established it as FSB in 2009 with a broadened mandate to promote 
financial stability. 

[5] As discussed in appendix II, other international bodies not 
presented in figure 1 also are involved in helping to implement the 
G20 financial reform commitments and are part of the international 
financial architecture. 

[6] Before 2008, the G20 was a finance minister/central bank governor-
level body, while the political leaders of only the G7/G8 
industrialized countries (Canada, France, Germany, Italy, Japan, the 
Russian Federation, the United Kingdom, and the United States) met 
regularly to discuss key economic issues. The G7/G8 has continued to 
meet regularly. 

[7] Additional committees within FSB include a Standing Committee on 
Budget and Resources, the Resolution Steering Group, various working 
groups, and several Regional Consultative Groups. 

[8] In a 2013 declaration, the G20 leaders supported FSB's proposal to 
review the structure of its representation. 

[9] Spillover reports examine the external effects of domestic 
policies in five systemic economies (China, the Euro area, Japan, the 
United Kingdom, and the United States). According to IMF, these 
reports, which underline the importance of financial links in 
spreading risk and analyze how policies in major economies impact 
financial markets, provide an added perspective to the policy line 
developed in bilateral discussions with each country, and serve as 
input into the Fund's broader multilateral surveillance. 

[10] Basel Committee members are expected to implement the Basel 
standards at a minimum, but members may decide to go beyond the Basel 
standards. 

[11] The Basel Committee's members include organizations with direct 
banking supervisory authority and central banks from Argentina, 
Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong 
SAR, India, Indonesia, Italy, Japan, South Korea, Luxembourg, Mexico, 
the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, 
Sweden, Switzerland, Turkey, the United Kingdom, and the United States. 

[12] The U.S. representatives include the Federal Insurance Office 
(FIO) Federal Reserve, and National Association of Insurance 
Commissioners (NAIC), which represents 50 U.S. state insurance 
regulators, the District of Columbia, and 5 U.S. territories. FIO, an 
office of the U.S. Department of the Treasury, was established under 
the Dodd-Frank Act. It has the statutory authority to represent the 
United States at IAIS and to coordinate federal efforts and develop 
federal policy on prudential aspects of international insurance 
matters. NAIC has no right to vote and can only designate up to 15 
NAIC members to be permitted to vote at any time. 

[13] IASB's predecessor, the International Accounting Standards 
Committee, was founded in 1973. 

[14] Securities are regulated at the province level in Canada. 

[15] To date, the G20 leaders have held eight summits: (1) November 
2008 in Washington, D.C., United States; (2) April 2009 in London, 
United Kingdom; (3) September 2009 in Pittsburgh, United States; (4) 
June 2010 in Toronto, Canada; (5) November 2010 in Seoul, South Korea; 
(6) November 2011 in Cannes, France; (7) June 2012 in Los Cabos, 
Mexico; and (8) September 2013 in St. Petersburg, Russia. 

[16] Although the G20 leaders generally have set the international 
regulatory reform agenda, FSB or standard setting bodies may first 
develop recommendations for policy reforms and then ask the G20 
leaders or G20 finance ministers and governors to endorse the 
recommendations as part of the reform agenda. 

[17] For example, see Howard Davies, "Global Financial Regulation 
after the Credit Crisis," Global Policy, vol. 1, no. 2 (May 2010) and 
Mario Giovanoli, "Reform of the International Financial Architecture 
after the Global Crisis," N.Y.U. Journal of International Law and 
Policy, vol. 42 (2009-2010). 

[18] See, for example, Chris Brummer, "How International Financial Law 
Works (and How It Doesn't)," 99 Geo. L.J. 257 (2011), and Stavros 
Gadinis, "The Financial Stability Board: The New Politics of 
International Financial Regulation," 48, Tex. Int'l L. J. 157 (2013), 
and Douglas W. Arner, and Michael W. Taylor, "The Global Financial 
Crisis and the Financial Stability Board: Hardening the Soft Law of 
International Financial Regulation," 32 U.New. S.Wales L. J. 488 
(2009). 

[19] See, for example, Garry J. Schinasi, and Edwin M. Truman, Reform 
of the Global Financial Architecture (2010). 

[20] See GAO, Dodd-Frank Regulations: Agencies Conducted Regulatory 
Analyses and Coordinated but Could Benefit from Additional Guidance on 
Major Rules, [hyperlink, http://www.gao.gov/products/GAO-14-67] 
(Washington, D.C.: Dec. 11, 2013). 

[21] Other U.S. priorities in the lead up to the Toronto summit 
included a restatement of support for stronger oversight of 
derivatives markets, more transparency and disclosure, and a more 
effective framework for winding down large global firms. 

[22] White House Fact sheet on the Seoul summit, available at 
[hyperlink, [http://www.whitehouse.gov/the-press-office/2010/11/12/g-
20-fact-sheet-us-financial-reform-and-g-20-leaders-agenda]. 

[23] Basel Committee on Banking Supervision, Basel III: A Global 
Regulatory Framework for More Resilient Banks and Banking Systems 
(Basel, Switzerland: Dec. 2010). The Basel Committee issued a revised 
version of the requirements in June 2011. 

[24] For example see Committee on Payment and Settlement Systems and 
Technical Committee of the International Organization of Securities 
Commissions, Principles for Financial Market Infrastructures (April 
2012); Technical Committee of the International Organization of 
Securities Commissions, Requirements for Mandatory Clearing, OR05/12 
(February 2012); Committee on Payment and Settlement Systems and 
Technical Committee of the International Organization of Securities 
Commissions, Final Report: Report on OTC Derivatives Data Reporting 
and Aggregation Requirements (January 2012); Technical Committee of 
the International Organization of Securities Commissions, Report on 
Trading of OTC Derivatives, FR03/11 (February 2011); and Technical 
Committee of the International Organization of Securities Commissions, 
Follow-On Analysis to the Report on Trading of OTC Derivatives, 
OR02/11 (January 2012). 

[25] FSB made recommendations in 2010 addressing practical issues that 
authorities may encounter in implementing the G-20 leaders' OTC 
derivatives reform commitments. See Financial Stability Board, 
Implementing OTC Derivatives Market Reforms (Oct. 25, 2010). At their 
November 2010 Seoul summit, G-20 leaders endorsed the FSB 
recommendations. At their November 2011 Cannes summit, G20 leaders 
called on the Basel Committee and IOSCO to work together and with 
other relevant organizations to develop standards on margining for 
noncentrally cleared OTC derivatives. 

[26] Basel Committee on Banking Supervision and Board of International 
Organization of Securities Commissions, "Margin Requirements for Non-
Centrally Cleared Derivatives" (September 2013). 

[27] Financial Stability Board, "Key Attributes of Effective 
Resolution Regimes for Financial Institutions" (October 2011). 

[28] As we recently reported, U.S. government assistance to prevent 
the failures of certain large financial institutions during the 2007-
2009 financial crisis helped avert a more severe crisis, but raised 
concerns about moral hazard and the appropriate scope of federal 
safety nets for the financial sector. Moral hazard can occur when 
market participants expect similar emergency actions in future crises, 
thereby weakening their incentives to properly manage risks. See GAO, 
Government Support for Bank Holding Companies: Statutory Changes to 
Limit Future Support Are Not Yet Fully Implemented, [hyperlink, 
http://www.gao.gov/products/GAO-14-18] (Washington, D.C.: Nov. 14, 
2013). 

[29] Financial Stability Board, Reducing the Moral Hazard Posed by 
Systemically Important Financial Institutions, FSB Recommendations and 
Time Lines (Oct. 20, 2010). 

[30] Financial Stability Board, A Coordination Framework for 
Monitoring the Implementation of Agreed G20/FSB Financial Reforms 
(Oct. 18, 2011). In general, FSB's implementation monitoring covers 
only the G20 financial reform commitments made in the aftermath of the 
global financial crisis. 

[31] FSB's Plenary determines the priority areas and reviews those 
areas annually in light of policy developments at the international 
level. FSB's Standing Committee on Standards Implementation is 
responsible for proposing changes to the list annually. 

[32] Under FSB's coordination framework, such reports are to include 
information that (1) is collected and reported frequently, (2) 
provides regular country-by-country implementation details, (3) may be 
relevant for assessing implementation progress, (4) highlights issues 
and lessons of experience that implementation has raised for the 
authorities and market participants, and (5) provides potential 
recommendations to address major impediments to, or gaps in, 
implementation. 

[33] We do not report separately on the implementation progress for 
resolution regimes and shadow banking. First, we discuss 
implementation progress of resolution regimes but only for SIFIs. 
Second, FSB noted that progress for shadow banking will be reported 
once implementation is sufficiently under way. For the time being, FSB 
is reporting on those elements of shadow banking that already are 
under way under nonpriority areas (which we discuss in the following 
section). 

[34] At their 2011 summit in Cannes, the G20 leaders called on 
jurisdictions to meet their commitment to implement fully and 
consistently Basel II and Basel 2.5 by 2011 and Basel III (starting in 
2013, for completion by 2019). 

[35] Basel Committee on Banking Supervision, Progress Report on 
Implementation of the Basel Regulatory Framework (Basel, Switzerland: 
October 2013). 

[36] The United States issued final and interim final Basel III rules 
in the summer of 2013 (78 Fed. Reg. 62018 (Oct. 11, 2013) and 78 Fed. 
Reg. 55340 (Sept. 10, 2013)). The rules' phase-in period for larger 
banking organizations began in January 2014, and the rule's phase-in 
period for less complex banking organizations will not begin until 
January 2015. The Basel requirements include implementation of certain 
provisions by 2019, but the federal rules provide until 2021 for 
phasing in certain requirements, such as the percentage of 
nonqualifying capital instruments issued prior to September 12, 2010, 
includable in additional tier 1 or tier 2 capital. 

[37] The Basel Committee's assessment found the European Union's 
proposed approach generally complied with 12 of the 14 key components 
of the Basel framework. See Basel Committee on Banking Supervision, 
Basel III Regulatory Consistency Assessment (Level 2), preliminary 
report European Union (October 2012). The committee's assessment found 
the United State's proposed approach generally complied with 12 of the 
13 key components. See Basel Committee on Banking Supervision, Basel 
III Regulatory Consistency Assessment (Level 2), preliminary report 
United States of America (October 2012). A component for operational 
risk was not assessed, as it is not applicable in the United States. 

[38] Basel Committee on Banking Supervision, Regulatory Consistency 
Assessment Programme Analysis (RCAP): Risk-weighted Assets for Credit 
Risk in the Banking Book (July 2013), and Regulatory Consistency 
Assessment Programme (RCAP): Analysis of Risk-weighted Assets for 
Market Risk (January 2013; revised February 2013). 

[39] See, for example, the Committee on Payment and Settlement Systems 
Technical Committee International Organization of Securities 
Commissions, Principles for Financial Market Infrastructures (April 
2012); Committee on Payment and Settlement Systems Technical Committee 
of the International Organization of Securities Commissions, Final 
Report: Report on OTC Derivatives Data Reporting and Aggregation 
Requirements (January 2012); and Basel Committee on Banking 
Supervision and Board of the International Organization of Securities 
Commissions, Margin Requirements for Noncentrally Cleared Derivatives 
(September 2013). 

[40] Financial Stability Board, OTC Derivatives Market Reforms, Sixth 
Progress Report on Implementation (Sept. 2, 2013). FSB has 24 member 
jurisdictions but treats the European Union members as one 
jurisdiction in this instance. 

[41] FSB has conducted thematic peer reviews of compensation, risk 
disclosure practices, mortgage underwriting and origination practices, 
deposit insurance systems, risk governance, resolution regimes, and 
reliance on credit rating agencies. FSB plans to conduct a peer review 
on the extent to which OTC derivatives trades are being reported to 
trade repositories in 2014. 

[42] [hyperlink, http://www.gao.gov/products/GAO-14-67]. 

[43] GAO is currently undertaking work on the economic benefits that 
the largest bank holding companies (those with more than $500 billion 
in total consolidated assets) have received as a result of actual or 
perceived U.S. government support. GAO has issued one of two reports 
on this topic. See [hyperlink, http://www.gao.gov/products/GAO-14-18]. 
A second report will address questions about whether the largest bank 
holding companies have received funding or other economic advantages 
as a result of expectations that the U.S. government would not allow 
them to fail. 

[44] Financial Stability Board, Reducing the Moral Hazard Posed by 
Systemically Important Financial Institutions, FSB Recommendations and 
Time Lines (Oct. 20, 2010). 

[45] Financial Stability Board, "Thematic Review on Resolution 
Regimes," Peer Review Report (Apr. 11, 2013). 

[46] For example, in Australia, legislation was enacted in 2008 and 
2010 to strengthen the crisis resolution powers available to its 
financial regulator. In the Netherlands, the resolution framework was 
broadened to address the risks posed by systemically relevant banks. 
Following the financial crisis, the Spanish government strengthened 
the deposit insurance agency, which is able to provide financial 
support in resolution, and in June 2009 created the Bank Resolution 
Authority to assist the reorganization of the banking industry. 
Similarly, following the financial crisis, the Swiss Banking Act was 
revised in 2011 and 2012 to include specific requirements for 
systemically important banks and additional restructuring provisions. 
In December 2013, the European Parliament and EU member countries 
reached agreement on the Bank Recovery and Resolution Directive, and 
its implementation will be an important step towards implementation of 
the key attributes in EU member countries. 

[47] GAO, Bankruptcy: Agencies Continue Rulemakings for Clarifying 
Specific Provisions of Orderly Liquidation Authority, [hyperlink, 
http://www.gao.gov/products/GAO-12-735] (Washington, D.C.: July 12, 
2012). 

[48] GAO, Financial Company Bankruptcies: Need to Further Consider 
Proposals' Impact on Systemic Risk, [hyperlink, 
http://www.gao.gov/products/GAO-13-622] (Washington, D.C.: July 18, 
2013). 

[49] FSB's Key Attributes of Effective Resolution Regimes recommends, 
among other things, that resolution authorities have the power to 
temporarily stay the exercise of early termination rights that may 
otherwise be triggered when a firm enters resolution. For example, 
under the Dodd-Frank Act's provisions on Orderly Liquidation 
Authority, qualified financial contracts--financial agreements 
including securities and commodities contracts, forward contracts, and 
repurchase and swap agreements--are subject to a 1-day stay and 
counterparties cannot terminate their contracts until 5: 00 p.m. on 
the day after FDIC begins its receivership. During this time, FDIC may 
have transferred the contract to a bridge financial company or 
repudiated (rejected) it. 

[50] Financial Stability Board, 2013 Update of Group of Global 
Systemically Important Banks (Nov. 1, 2013). 

[51] G-SIBs also are subject to resolution planning requirements and 
higher supervisory expectations for risk management functions, data 
aggregation capabilities, risk governance, and internal controls. 

[52] Basel Committee on Banking Supervision, Report to G20 Leaders on 
monitoring implementation of Basel III regulatory reforms, Bank for 
International Settlements (August 2013). 

[53] The Federal Reserve has issued several rules to enhance 
prudential standards for bank holding companies with $50 billion or 
more in total consolidated assets and nonbank financial companies FSOC 
has designated for supervision by the Federal Reserve. These rules 
apply to U.S. G-SIBs and D-SIBs. 

[54] In the United States, under the Dodd-Frank Act, FSOC is 
authorized to determine that a nonbank financial company's material 
financial distress--or the nature, scope, size, scale, concentration, 
interconnectedness, or mix of its activities--could pose a threat to 
U.S. financial stability and that such company will be subject to 
supervision by the Federal Reserve and enhanced prudential standards. 
FSOC designated American International Group, Inc., General Electric 
Capital Corporation, Inc., and Prudential Financial, Inc., for 
consolidated supervision by the Federal Reserve. We currently are 
examining FSOC's designation process. 

[55] Basel Committee on Banking Supervision, A Framework for Dealing 
with Systemically Important Banks (October 2012). 

[56] International Association of Insurance Supervisors, Global 
Systemically Important Insurers: Initial Assessment Methodology (July 
18, 2013). 

[57] Financial Stability Board, Global Systemically Important Insurers 
and the Policy Measures That Will Apply to Them (July 18, 2013). 

[58] Financial Stability Board, FSB progress report: Implementing the 
FSB Principles for Sound Compensation (Aug. 26, 2013). 

[59] FSB has conducted two peer reviews on compensation. See Financial 
Stability Board, "Thematic Peer Review on Compensation," Peer Review 
Report (Mar. 30, 2010), and Financial Stability Board, "2011 Thematic 
Peer Review on Compensation," Peer Review Report (Oct. 7, 2011). 

[60] For the G20 reform commitments in the nonpriority areas, 
implementation monitoring is undertaken by FSB's Implementation 
Monitoring Network. In large part, FSB has monitored progress through 
annual surveys of its member jurisdictions, with the first survey 
completed in 2010. In some cases, standard setting bodies may collect 
and report implementation information to FSB. In its 2010 and 2011 
surveys, FSB generally covered all of the G20 reform commitments. 
After adopting its coordination framework in 2011, FSB has sought to 
exclude from the survey the G20 reform commitments on its priority 
area list. 

[61] Shadow banking is a priority area, and FSB plans to report on the 
implementation of the reform commitments once implementation is 
sufficiently under way. In the interim, FSB included the G20 reform 
commitment on shadow banking in its 2013 jurisdictional survey. 

[62] The United States noted that the National Association of 
Insurance Commissioners has taken action to improve its process for 
assessing and valuing the credit quality of securitizations held by 
insurance companies. 

[63] FSAPs have two components: a financial stability assessment, 
which is IMF's responsibility, and a financial development assessment 
in developing and emerging market countries, which is the World Bank's 
responsibility. To assess financial stability, an FSAP examines the 
soundness of the banks and other financial institutions, conducts 
stress tests, rates the quality of financial regulation and 
supervision against accepted international standards, and evaluates 
the ability of country authorities to intervene effectively in case of 
a financial crisis. FSAP recommendations are of an advisory nature, 
but future FSAPs and other peer reviews assess the extent to which 
recommendations have been implemented. 

[64] The mandatory financial stability assessments under an FSAP 
include an assessment of (1) the source, probability, and potential 
impact of the main risks to macro-financial stability in the near 
term, based on an analysis of the structure and soundness of the 
financial system and its inter-linkages with the rest of the economy; 
(2) the country's financial stability policy framework, involving an 
evaluation of the effectiveness of financial sector supervision 
against international standards; and (3) the authorities' capacity to 
manage and resolve a financial crisis should the risks materialize, 
looking at the country's liquidity management framework, financial 
safety nets, crisis preparedness, and crisis resolution framework. 

[65] The jurisdictions are Australia, Austria, Belgium, Brazil, 
Canada, China, Denmark, Finland, France, Germany, Hong Kong SAR, 
Italy, India, Ireland, Japan, Luxembourg, Mexico, the Netherlands, 
Norway, Poland, Russia, Singapore, South Korea, Spain, Sweden, 
Switzerland, Turkey, the United Kingdom, and the United States. 

[66] International Monetary Fund, "United States: Publication of 
Financial Sector Assessment Program Documentation--Financial System 
Stability Assessment," IMF Country Report No. 10/247 (Washington, 
D.C.: July 9, 2010). 

[67] Housing government-sponsored enterprises include Fannie Mae and 
Freddie Mac, which were created by Congress as private, federally 
chartered companies to provide, among other things, liquidity to home 
mortgage markets by purchasing mortgage loans, thus enabling lenders 
to make additional loans. Given their precarious financial condition, 
Fannie Mae and Freddie Mac were placed in conservatorship in September 
2008, with the Federal Housing Finance Agency serving as the 
conservator under powers provided in the Housing and Economic Recovery 
Act of 2008. 

[68] International Monetary Fund, "United States: Publication of 
Financial Sector Assessment Program Documentation--Reports on 
Observance and Codes," IMF Country Report No. 10/250 (July 2010). 

[69] For example, the assessment found that (1) the multiplicity of 
regulators created challenges for systemic oversight, (2) consolidated 
regulation and supervision have fallen short of what is necessary for 
effective oversight of systemic groups, (3) weaknesses existed in the 
regulation and supervision of risk management, and (4) funding 
arrangements for supervisors were a concern, especially for SEC, CFTC, 
and the state insurance regulators. 

[70] Financial Stability Board, Interim Report of the Peer Review of 
the FSB Principles for Reducing Reliance on Credit Rating Agency 
Ratings (Aug. 29, 2013). 

[71] Financial Stability Board, Thematic Review on Risk Governance 
(Feb. 11, 2013). 

[72] Financial Stability Board, Handbook for FSB Peer Reviews (Jan. 7, 
2014). 

[73] Financial Stability Board, "Peer Review of the United States," 
Peer Review Report (Aug. 27, 2013). 

[74] GAO, Financial Stability: New Council and Research Office Should 
Strengthen the Accountability and Transparency of Their Decisions, 
[hyperlink, http://www.gao.gov/products/GAO-12-886] (Washington, D.C.: 
Sept. 11, 2012). 

[75] FSB noted that while the Federal Insurance Office represents the 
United States on international insurance matters and negotiates 
covered agreements, only the states have the authority (but are under 
no legal obligation) to implement laws that are consistent with those 
agreements and international standards agreed to within IAIS. 

[76] See, for example, Stephane Rottier and Nicolas Veron, "Not All 
Financial Regulation Is Global," Bruegel Policy Brief, Issue 2010/07 
(August 2010). 

[77] Institute of International Finance, Promoting Greater 
International Regulatory Consistency (June 2013). 

[78] FSB, A Coordination Framework for Monitoring the Implementation 
of Agreed G20/FSB Financial Reforms (Oct. 18, 2011). FSB's 
implementation monitoring covers only the G20's financial reform 
commitments made in the aftermath of the global financial crisis, 
unless otherwise mandated by the G20. 

[79] FSB's Standing Committee on Standards Implementation is 
responsible for proposing changes to the list annually. 

[80] Such reports are to include information that (1) is collected and 
reported frequently, (2) provides regular country-by-country 
implementation details, (3) may be relevant for assessing 
implementation progress, (4) highlights issues and lessons of 
experience that implementation has raised for the authorities and 
market participants, and (5) provides potential recommendations to 
address major impediments to, or gaps in, implementation. 

[81] We do not report separately on the implementation progress for 
resolution regimes and shadow banking. First, we discuss 
implementation progress of resolution regimes but only for SIFIs. 
Second, FSB noted that progress for shadow banking will be reported 
once implementation is sufficiently under way. For the time being, FSB 
is reporting on those elements of shadow banking that already are 
under way under nonpriority areas. 

[82] For the G20 reform commitments in the nonpriority areas, 
implementation monitoring is undertaken by FSB's Implementation 
Monitoring Network. In large part, FSB has monitored progress through 
annual surveys of its member jurisdictions, with the first survey 
completed in 2010. In some cases, standard setting bodies may collect 
and report implementation information to FSB. In its 2010 and 2011 
surveys, FSB generally covered all of the G20 reform commitments. 
After adopting its coordination framework in 2011, FSB has sought to 
exclude from the survey the G20 reform commitments on its priority 
area list. 

[83] Developed by the World Economic Forum, the global competitiveness 
index is a comprehensive tool designed to measure the microeconomic 
and macroeconomic foundations of national competitiveness. The index 
scale ranges from 1 to 7 (with 7 the highest score), and 148 economies 
are ranked based on their score. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation, and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the 
performance and accountability of the federal government for the 
American people. GAO examines the use of public funds; evaluates 
federal programs and policies; and provides analyses, recommendations, 
and other assistance to help Congress make informed oversight, policy, 
and funding decisions. GAO's commitment to good government is 
reflected in its core values of accountability, integrity, and 
reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's website [hyperlink, http://www.gao.gov]. Each 
weekday afternoon, GAO posts on its website newly released reports, 
testimony, and correspondence. To have GAO e-mail you a list of newly 
posted products, go to [hyperlink, http://www.gao.gov] and select 
"E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO's actual cost of 
production and distribution and depends on the number of pages in the 
publication and whether the publication is printed in color or black 
and white. Pricing and ordering information is posted on GAO's 
website, [hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 
MasterCard, Visa, check, or money order. Call for additional 
information. 

Connect with GAO: 

Connect with GAO on facebook, flickr, twitter, and YouTube.
Subscribe to our RSS Feeds or E mail Updates. Listen to our Podcasts.
Visit GAO on the web at [hyperlink, http://www.gao.gov]. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 
Website: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]; 
E-mail: fraudnet@gao.gov; 
Automated answering system: (800) 424-5454 or (202) 512-7470. 

Congressional Relations: 

Katherine Siggerud, Managing Director, siggerudk@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, DC 20548. 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, DC 20548. 

[End of document]