GFIA responds to the Financial Stability Board’s consultation on Liquidity Preparedness for Margin and Collateral Calls

20 June 2024

The Global Federation of Insurance Associations (GFIA) has responded to a consultation by the Financial Stability Board on Liquidity Preparedness for Margin and Collateral Calls.

Referring to a report it published this year, GFIA stresses that the insurance industry is already highly regulated with existing standards reflecting its unique characteristics. It is therefore important, GFIA argues, that authorities in each jurisdiction take this into account when interpreting the FSB recommendations.

Furthermore, GFIA adds that it is important to avoid creating unnecessary regulatory requirements, when these are considered at a jurisdictional level and risk is already well managed under existing rules in place on liquidity risk for insurance companies.

Finally, non-banking financial institutions need to hold significant amounts of cash to cover margin calls during periods of stress. GFIA therefore encourages discussions with industry to assess the feasibility of expanding the type of assets accepted as collateral from cash-only to some types of non-cash.

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