Joint Statement on the U.S.-UK Financial Regulatory Working Group

WASHINGTON – The eighth official meeting of the U.S.-UK Financial Regulatory Working Group took place in Washington, D.C., on September 6, 2023.

Officials and senior staff from HM Treasury and the U.S. Department of the Treasury were joined by representatives from independent regulatory agencies, including the Bank of England, Financial Conduct Authority, Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Securities and Exchange Commission. Agency participation varied across themes with participants expressing views on issues in their respective areas of responsibility.

The Working Group meeting focused on several key themes, including: 1) economic and financial stability outlook 2) international banking issues 3) developments in the non-bank sector 4) climate-related financial risks and sustainable finance 5) international engagement and 6) digital finance.

The meeting opened with a broad discussion of the UK and U.S. economic and financial stability outlook, with participants taking stock of current economic trends and market conditions and considering broader global factors.

On banking issues, participants offered an overview of developments in their domestic banking systems. The Working Group acknowledged work being led by the Financial Stability Board (FSB) and Basel Committee on Banking Supervision in response to events in March 2023, including the FSB’s forthcoming report on preliminary lessons learned in resolution. Discussions were held on each jurisdiction’s banking regulation, including resolution-related updates, with participants discussing the importance of implementing reforms consistent with Basel III, and of ongoing dialogue among international partners when implementing these reforms.

The Working Group continued with a discussion of developments in non-bank financial intermediation (NBFI) and the importance and urgency of fostering resilience in the NBFI sector. Participants exchanged views on national money-market fund reforms and NBFI work being taken forward by the FSB and international standard setting bodies, such as the FSB’s upcoming workstream to address vulnerabilities from leverage in the NBFI sector. Participants also discussed the importance of global implementation of reforms.

Participants held conversations on climate-related financial risks and sustainable finance in line with their respective mandates. Representatives noted progress in this area, including the publication of the International Sustainability Standards Board’s (ISSB) final standards as well as the International Organization of Securities Commission’s endorsement of those standards, which called on IOSCO’s members to consider ways in which they might adopt, apply or otherwise be informed by the ISSB standards within the context of their jurisdictional arrangements. Participants noted that the ISSB standards will promote interoperability with respect to climate-related disclosures. The UK authorities discussed their Transition Plan Taskforce and ESG ratings regulation consultation and noted international initiatives on these topics. Participants also discussed developments on climate risk-related financial issues in multilateral fora, including in the G20 Sustainable Finance Working Group and the FSB.

Acknowledging the importance of cross-border cooperation, the Working Group shared updates on discussions and priorities across multilateral fora, including the G7 and G20, the FSB and international standard-setting bodies. Participants also discussed issues related to operational resilience.

Finally, participants shared views on issues related to digital assets and other areas of digital finance. Representatives offered updates on recent developments in crypto-asset markets and avenues for future work and international engagement in the space. Participants agreed on the importance of effective regulation and oversight of crypto assets and markets and reiterated their support for the international work on crypto assets and stablecoins through the FSB and international standard setting bodies. Participants discussed the finalization of the FSB’s high-level recommendations to promote consistency, and emphasized their importance as jurisdictions implement their own frameworks, consistent with the FSB recommendations, to avoid regulatory arbitrage. Participants also briefly discussed U.S. and UK approaches to central bank digital currencies, digital payments, distributed ledger technology and artificial intelligence. The Working Group maintained the importance of comprehensive regulation in the area of digital finance, as well as its commitment to fostering responsible digital financial innovation, including through the parallel bilateral Financial Innovation Partnership, which brings together subject-matter experts for technical discussions that supplement discussions in the Working Group.

At the conclusion of the event, the Working Group agreed to reconvene in 2024, while noting the importance of continued open dialogue on shared priorities.

The U.S.-UK Financial Regulatory Working Group is an ongoing biannual dialogue established in 2018 to deepen bilateral regulatory cooperation and to enhance: financial stability; investor protection; fair, orderly, and efficient markets; and capital formation across both jurisdictions.

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