Michelle Bowman, a member of the Board of Governors of the U.S. Federal Reserve System, recently urged global regulators to establish clear rules and transparency in the rapidly evolving digital asset industry.
Speaking at the Salzburg Global Seminar on bank regulation and supervision, Bowman emphasized the need for regulators to adapt to changing economic conditions while ensuring open debate and transparency in the regulatory process.
Speech by Governor Bowman on bank regulation and supervision: https://t.co/LzwsKieEcx
— Federal Reserve (@federalreserve) June 25, 2023
Bowman highlighted the emergence of a “supervisory void” in the financial industry, leaving institutions unsure of how to navigate emerging technologies and innovative banking activities.
To address this, she proposed the implementation of an independent third-party review to analyze recent bank failures and the resulting stress in the banking system.
Bowman argued that current internal reviews conducted by regulatory agencies may have limitations, making an independent review crucial for a comprehensive and impartial assessment.
Furthermore, she called for improved communication among regulators, greater transparency in supervisory expectations, and a focus on relevant banking risks.
In addition to addressing novel banking activities, Bowman stressed the importance of providing clear regulatory guidance to avoid uncertainty and potential harm to banks and their customers.
When it comes to regulatory reform, she advocated for responsible changes that consider the consequences and impact on the broader financial system, noting that increases in capital requirements may have unintended consequences.
Bowman also discussed the challenge of implementing international capital standards and promoting consistency across jurisdictions.
Overall, her speech encourages a well-informed and careful approach to regulatory reform, taking into account the lessons learned from recent bank failures and the evolving banking landscape.
Compiled by Coinbold
