The Financial Stability Oversight Council (FSOC) – the United States federal government organization, which identifies risks to the financial stability of the United States, promotes market discipline and responds to emerging threats to the stability of the U.S. financial system – published its 2020 annual report the 3rd December.
This year’s report analyses the financial effects of the COVID-19 pandemic and the policy responses to mitigate its impact on the economy and the financial system. Additionally, the Council’s annual report describes significant financial market and regulatory developments, potential emerging threats to U.S. financial stability, recommendations to promote U.S. financial stability, and the activities of the Council.
“This year’s annual report reflects the Council’s engagement throughout the pandemic as a key forum for federal and state regulators to share information, analyse risks, and coordinate their responses to the most severe U.S. economic shock since the Great Depression,” said Treasury Secretary Steven T. Mnuchin.
On Central Counterparties (CCPs) it was stated, that “in response to the market volatility in March 2020, aggregate margin levels increased significantly, but the markets served by the CCPs continued to function in an orderly fashion. While the cleared derivatives markets functioned as designed, there is continued concern about the impact of contingent liquidity demands on clearing members and their clients related to margin requirements.” The FSOC recommends “that agencies should continue to analyse and monitor the impact of regulatory risk management frameworks in cleared, uncleared, and related securities markets and their impact on systemically important intermediaries and their clients.”
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