Bowman Outlines Global Plan To Modernize Bank Oversight
By CU Today Staff —
LONDON—Federal Reserve Vice Chair for Supervision Michelle Bowman called for a broad modernization of bank regulation Monday, arguing supervisors must focus on material financial risks, tailor oversight to institutions' size and complexity, increase transparency and accountability, and support responsible innovation rather than impose unnecessary regulatory burdens.
Bowman delivered the remarks at a Bank Policy Institute conference in London while outlining work underway through the Financial Stability Board's Standing Committee on Supervisory and Regulatory Cooperation, which she chairs.
Bowman said the failure of Silicon Valley Bank demonstrated the need for a more disciplined supervisory approach, arguing that "more findings do not equal better supervision." She said regulators should abandon a "more is better" philosophy in favor of targeted, risk-based oversight, while ensuring that community banks are not subjected to the same regulatory expectations as the world's largest and most complex financial institutions.
She pointed to several modernization initiatives already underway in the United States, including proposed reforms to the Federal Reserve's Basel III capital framework, publication of supervisory operating principles, efforts to update outdated regulatory asset thresholds to reflect economic growth and inflation, and revisions to examination standards that place greater emphasis on material safety-and-soundness risks. Bowman also highlighted work to provide practical guidance for financial institutions adopting artificial intelligence, saying regulators should encourage responsible innovation without relying on overly prescriptive rules.
Looking ahead, Bowman said the Financial Stability Board plans to release draft modernization principles for public comment this fall before submitting a final report to the G20. She urged regulators worldwide to adopt flexible, risk-focused approaches tailored to their own financial systems, arguing that effective modernization requires continuously adapting supervisory frameworks as markets, technology and risks evolve.
Originally reported by CU Today.