* FSB to study bond market liquidity, some asset managers
* FSB's Carney says bail-in bonds plan won't be revamped (Adds more detail)
By Paul Carrel and Frank Siebelt
FRANKFURT, March 26 (Reuters) - The global financial systemis safer but there is no room for complacency because ofconcerns about the international bond market, FinancialStability Board Chairman Mark Carney said on Thursday.
The FSB coordinates financial regulation for the Group of 20leading economies (G20) and has been introducing tougher rulesfor banks and markets to plug gaps highlighted by the 2007-09financial crisis.
Carney, who is also governor of the Bank of England, saidthe financial system was now safer, simpler and fairer but therewere concerns about liquidity, or the ability of investors tosell bonds smoothly.
Policymakers worry that interest rate hikes could trigger astampede among investors to dump bonds at the same time.
"Market adjustments to date have occurred withoutsignificant stress. However, the risk of a sharp and disorderlyreversal remains, given the compressed credit and liquidity riskpremia," Carney told a news conference after a meeting of theFSB.
The FSB said members were concerned about the growth ofassets at funds that offer on-demand redemptions while investingin less liquid assets.
It has agreed to identify financial stability risksassociated with market liquidity in fixed income markets andasset management activities and will make policy recommendationsas necessary after initial findings are discussed in September.
FEW TLAC TWEAKS
The FSB has already published plans requiring the world'stop 30 banks like Goldman Sachs and HSBC toissue bonds that could be written down to "bail-in" the lendersif they get into trouble.
Seen as the final major reform for ending "too big to fail"banks, the bonds are known as total loss absorption capacity orTLAC and would be equivalent to 16-20 percent of a bank's riskweighted assets.
Carney said lenders should expect the final version or termsheet to look "very similar" to the draft plans when G20 leadersendorse them at a summit in November, despite banks challengingkey elements.
"I wouldn't expect those more fundamental questions, whichgoes against the principles behind TLAC, to be reflected in anadjustment of the final agreement," Carney said.
He hinted at some flexibility in implementation, however,
"As well, I would underscore that the term sheet is a range-- and there is a beginning and end to that range, so that isrelevant as well," Carney added.
Standard & Poor's has estimated that the 30 banks will haveto issue more than $500 billion in bonds to comply with TLAC. (Reporting by Paul Carrel and Frank Siebelt; Writing by HuwJones; Editing by Catherine Evans)