Governor Michelle W. Bowman, a member of the Board of Governors of the Federal Reserve System, emphasised the necessity for a responsive and accountable regulatory framework within the banking sector. Talking at an occasion in Salzburg, she mentioned the significance of adapting to altering financial circumstances and rising dangers whereas guaranteeing transparency and open debate in regulatory changes.
Governor Bowman highlighted current stress within the banking system and the failures of sure banks, underscoring the deficiencies in danger administration practices and supervisory priorities. To deal with these points, she proposed an unbiased third-party overview to completely analyze the elements contributing to current financial institution failures and stress within the banking system. The purpose is to offer a complete understanding of the occasions and enhance the impartiality and effectiveness of future opinions.
Moreover, Governor Bowman emphasised the necessity for efficient supervision and regulation, specializing in core banking dangers corresponding to liquidity and rate of interest danger. Whereas supporting sure reforms, she expressed concern that increased capital necessities may hinder financial institution lending and competitors with out addressing the underlying effectiveness of supervision. She debunked the notion that current financial institution stress resulted from a much less assertive supervisory strategy, highlighting the power and resilience of the banking system in the present day in comparison with pre-2008 monetary disaster.
Governor Bowman referred to as for enhancements in supervision, transparency in supervisory expectations, and a transparent regulatory strategy to novel banking actions, together with together with banking as a service and digital belongings. She careworn the significance of evaluating the implications of regulatory revisions and contemplating the impression on the broader monetary system. Whereas supportive of Basel III endgame reforms, she emphasised the necessity for public remark and transparency within the rulemaking course of.
Governor Bowman additionally urged policymakers to be aware of the impression of capital necessities on worldwide competitors and the shadow banking system. Greater capital necessities may create an obstacle for regulated banks in comparison with non-bank opponents, probably shifting monetary exercise out of the regulated banking system.
