The Financial Stability Oversight Council (FSOC) released its 2017 annual report, which describes financial market and regulatory developments, potential emerging threats to U.S. financial stability, and recommendations to promote financial stability.
“The annual report is the culmination of a productive and collaborative process among all of FSOC’s members,” Treasury Secretary Steven Mnuchin said. “We received valuable input from the other agencies, and I look forward to working with them on implementing the recommendations.”
Overall, FSOC said the financial regulatory system should promote economic growth by preventing financial crises while minimizing regulations that increase costs without commensurate benefits.
Among its recommendations, FSOC supports the creation of a private sector council to work with regulators on ways to improve cybersecurity. It also states that regulators should ensure that financial institutions have sufficient capital and liquidity to lessen the impact of economic shocks. Further, regulators should make sure rules for central counterparties and their clearing members are robust enough to mitigate potential threats to financial stability.
In addition, the report said the Securities and Exchange Commission should assess the effectiveness of money market mutual fund reforms that went into effect last year.
Also, regulators, as well as market participants, should complete work on alternative reference rates, while mitigating disruptions associated with the transition to a new reference rate.
Finally, regulators and market participants should continue efforts to improve the coverage, quality, and accessibility of financial data.