An international body that monitors and makes recommendations about the global financial system. The FSB coordinates financial regulation across jurisdictions and assesses vulnerabilities that could affect forex market stability.
What the FSB Does
The Financial Stability Board was established in 2009 by the G20 (Group of Twenty) as the successor to the Financial Stability Forum. It coordinates national financial authorities and international standard-setting bodies to develop and promote effective regulatory and supervisory policies. The FSB is hosted by the Bank for International Settlements (BIS) in Basel, Switzerland.
FSB and Financial Markets
The FSB identifies and addresses systemic risks in the global financial system. Its work on global systemically important banks (G-SIBs), over-the-counter derivatives reform, and shadow banking has shaped the regulatory environment in which forex markets operate.
FSB recommendations influence how banks manage forex trading risk, how central counterparties clear currency derivatives, and how non-bank financial institutions participate in foreign exchange markets. These regulations affect market liquidity, trading costs, and counterparty risk.
Forex Relevance
While the FSB does not directly move currencies, its regulatory recommendations shape the structural environment of forex trading. Traders indirectly experience FSB influence through their brokers' capital requirements, margin rules, and reporting obligations.
Related Terms
Bank for International Settlements (BIS)
An international institution owned by 63 central banks that serves as a bank for central banks, facilitates monetary cooperation, and produces influential research on global financial markets including the definitive Triennial Survey of forex turnover.
G20 (Group of Twenty)
An international forum of 19 countries plus the European Union and African Union representing the largest economies. The G20 addresses global economic issues including exchange rate policies, financial regulation, and trade.
International Monetary Fund (IMF)
An international organization of 190 member countries that promotes global monetary cooperation, financial stability, and economic growth. The IMF provides loans to countries in financial distress and monitors global exchange rate policies.
Central Bank
A national or supranational institution responsible for managing a country's monetary policy, controlling the money supply, setting interest rates, and maintaining financial stability.
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