Post-financial crisis reforms have made the financial system “more resilient,” but high debt levels in many parts of the world could expose the system to “significant risk,” according to a new Financial Stability Board report.

The international regulatory body said the main reforms in such areas as new capital, liquidity, bank resolution, and derivatives rules are now in place, leaving large banks “better capitalized, less leveraged, and more liquid” and over-the-counter derivatives markets “simpler and more transparent.”

“The reforms make the financial system more resilient, and thereby reduce the likelihood, severity — and associated public cost — of future crises,” the report said.

But the FSB noted risks to the system keep evolving and it is now changing its regulatory focus from the design of new policy initiatives to “ensuring the implementation of these reforms and rigorous evaluation of their effects.”

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A Forbes analysis of the report, moreover, said there were “numerous gaps in implementing bank and derivatives reforms” across the Group of 20 nations that should be of concern to taxpayers.

“France, Germany, Italy, Netherlands, Spain, and the United Kingdom remain materially non-compliant with risk-based capital requirements,” Forbes said, noting those countries account for more than one-third of the 29 globally systemically important banks’ assets.

“These banks’ financial stability is crucial not only to global financial stability, but also to the stability of the global economy,” Forbes added.

According to the publication, banks are also lagging in implementing Basel III’s leverage ratio as well as the Net Stability Funding Ratio, leaving them “relying on unstable sources of funding.”

The FSB should focus on “whether politicians and regulators have the political will to make sure that financial reforms are implemented consistently and in a timely manner across all twenty jurisdictions,” Forbes recommended.

The evolving risks identified by the board include high sovereign, corporate, and household debt levels in many parts of the world. “Sharply rising yields could trigger swings in cross-border capital flows, which could spill over to local equity, bond, and foreign exchange markets,” the report warned.

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