The Financial Stability Board (FSB) has nominated Andrew Bailey, Governor of the Bank of England, to serve as its next Chair for a three-year term beginning in July.
Bailey currently serves as Chair of the FSB's Standing Committee on Supervisory and Regulatory Cooperation, which seeks to address financial stability risks through coordinated regulatory and supervisory activity and policies. He will replace current FSB Chair Klaas Knot, Governor of De Nederlandsche Bank.
"It is at times like this that the stability of the financial system is put to the test," Bailey said. "That stability rests on strong regulatory standards and effective international co-operation. The global financial crisis underscored the importance of addressing challenges collectively and strengthening the multilateral system. The FSB exemplifies this approach, ensuring a resilient and stable financial system for the future. The FSB has a vital leadership role, and I am firmly committed to continuing that role in a very rapidly changing world."
Notably, Bailey has long emphasized the importance of culture. In March 2017, Bailey, then the CEO of the UK Financial Conduct Authority, gave a speech entitled, "Culture in Financial Institutions: It’s Everywhere and Nowhere," which we have referenced frequently over the past 8 years. "[A]lmost everything that goes on in an institution affects its culture," Bailey argued, describing culture as an output rather than an input.
"Culture in firms is an outcome of many inputs and the incentives that are created around those inputs," he said. "I have put more emphasis on what I might call more structural determinants of those incentives rather than adopting a more purely behavioural approach. Culture is characterised by a pattern of behaviours no doubt, but if we are to understand its causes, I think we need to get back to more structural features in, for instance, governance and risk taking." It will be interesting to see how this philosophy informs his priorities as Chair of the FSB.
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