Bowman’s Views on Bank Regulation in 2025 and Beyond
Date: 2025-02-05 20:00 Source: FRB
Summary:
In a recent speech, Federal Reserve Board Governor Michelle W. Bowman outlined her perspectives on the evolution of bank regulation in 2025 and beyond. She emphasized the need for a thoughtful and forward-looking approach to regulation that balances the protection of financial stability with the promotion of economic growth.
Key Points:
- Dynamic Regulatory Environment: Bowman acknowledged that the regulatory landscape for banks is constantly evolving, driven by technological advancements, economic shifts, and emerging risks. She emphasized the importance of adapting regulations to changing circumstances while maintaining a consistent focus on safety and soundness.
- Digital Transformation: Bowman highlighted the transformative impact of digital technologies on banking and the need for regulations that keep pace with these developments. She stressed the importance of promoting innovation while ensuring the stability and integrity of the financial system.
- Cybersecurity Risks: With the increasing reliance on technology, Bowman emphasized the need to strengthen cybersecurity defenses against sophisticated threats. She called for a collaborative effort by banks, regulators, and other stakeholders to address these risks effectively.
- Climate-Related Risks: Bowman recognized the growing importance of climate-related risks for the financial sector. She urged banks to take a proactive approach in assessing and mitigating these risks, which could have significant implications for financial stability.
- Prudential Regulation: Bowman emphasized the ongoing importance of prudential regulation to ensure the safety and soundness of individual banks. She discussed the need to strike a balance between maintaining strong capital and liquidity requirements and allowing banks to take reasonable risks in support of economic growth.
- Macroprudential Policy: Bowman underscored the role of macroprudential policy in addressing systemic risks that could threaten the broader financial system. She noted that macroprudential tools, such as countercyclical capital buffers and loan-to-value limits, can help mitigate risks that may not be fully captured by individual bank supervision.
- International Cooperation: Bowman emphasized the importance of international cooperation in bank regulation, particularly in cross-border banking and emerging risk areas. She highlighted the need for coordinated efforts among regulators to ensure a consistent and effective approach to global financial stability.
Conclusion:
Governor Bowman concluded by reiterating the Federal Reserve’s commitment to prudent and forward-looking bank regulation. She emphasized the need for ongoing dialogue and collaboration among stakeholders to develop a regulatory framework that fosters financial stability, promotes economic growth, and addresses emerging risks effectively.
Bowman, Bank Regulation in 2025 and Beyond
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