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Andrew Bailey has been chosen as the next chair of the world’s financial stability watchdog, handing the Bank of England governor responsibility for trying to avoid a financial crisis by co-ordinating policies between top global regulators.
Bailey’s nomination as chair of the Financial Stability Board for the next three years, a role he will hold alongside heading the BoE, comes as rising geopolitical tensions and market turmoil sparked by US President Donald Trump’s tariffs threaten to upend the global financial system.
The FSB — which brings together the world’s leading central bankers, finance ministers and regulators — will be on alert for any fallout from the market rout caused by the US president’s imposition of costly tariffs on many US imports.
The Basel-based body, which was set up by G20 nations in 2009 in response to the global financial crisis, is also grappling with how to co-ordinate regulation in contentious areas such as crypto assets, hedge funds, artificial intelligence and climate change.
“It is at times like this that the stability of the financial system is put to the test,” said Bailey, who is due to take over from Dutch central bank governor Klaas Knot on July 1. “That stability rests on strong regulatory standards and effective international co-operation.”
Trump’s efforts to shake up the established world order and his apparent aversion to multilateral organisations are likely to make it more challenging for the FSB to maintain a consensus on how best to prevent another financial crisis.
Bailey said the 2008 banking meltdown had “underscored the importance of addressing challenges collectively and strengthening the multilateral system”, and that the FSB had a “vital” role in “a very rapidly changing world”.
The FSB does not have the power to make regulations itself. But it aims to bring the world’s regulators together to agree common proposals for tackling the main risks to the financial system, which are then left to national authorities to implement.
Last year it published proposals to tackle risks among non-bank financial companies — including hedge funds, private equity and insurers — in response to turmoil in parts of the sector after the Covid-19 pandemic, such as the 2022 crisis in the UK pension system.
Knot set out several other areas of focus in a letter to finance ministers and central bank governors in February, including making cross-border payments faster and cheaper, sharing alerts on cyber attacks and addressing the risks of climate change.
Knot, FSB chair since 2021, said: “Andrew has a proven track record of fostering collaboration, having led recent key FSB reform initiatives, including on cryptoassets and non-bank financial intermediation.”
Bailey has worked at the BoE for most of his career, having joined the central bank in 1985, shortly after finishing his PhD in economic history at the University of Cambridge.
He left the BoE in 2016 to become head of its sister regulator the Financial Conduct Authority and returned as governor just as the pandemic hit in March 2020.
https://www.ft.com/content/54887394-5d7b-4e3b-b0f2-dfa950a87405
