March 8, 2010 / 2:46 PM / 10 years ago

BIS-FSB's Draghi-systemic regulation needed to address CDS

BASEL, March 8 (Reuters) - Greater regulation would be a natural outcome to deal with systemic risks such as those arising from credit default swaps, the head of the Financial Stability Board said on Monday.

“Whenever something has systemic implications, you can bet it is going to get systemic regulation,” Mario Draghi told a news conference in response to a question on credit default swaps.

“It’s very unlikely that these markets will be left in the same state as they were before the crisis.”

Draghi, who is also head of the Italian central bank, said that it was too early to say what sort of regulatory mechanisms the FSB might use to address the problem.

Draghi was speaking at a media briefing on the sidelines of a meeting of the FSB at the Bank for International Settlements in the Swiss city of Basel.

The FSB is made up of senior representatives of national central banks, regulatory and supervisory authorities and ministries of finance, international financial institutions, standard setting bodies, and committees of central bank experts.

The board has been established to address vulnerabilities and to develop and implement strong regulatory, supervisory and other policies in the interest of financial stability.

The FSB has been tasked by the G20 group of countries to make sure that a wide range of new financial regulation is applied consistently across the world. (Reporting by Krista Hughes and Tamora Vidaillet; Editing by Toby Chopra)

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