Federal Reserve to Integrate Novel Activities Supervision into Regular Process
Washington D.C. – August 15, 2025 – The Federal Reserve Board announced today that it will be sunsetting its dedicated Novel Activities Supervision (NAS) program. This strategic shift will see the monitoring of banks’ innovative activities integrated back into the Federal Reserve’s standard supervisory framework. The change will take effect following a transition period, with the goal of creating a more streamlined and comprehensive approach to overseeing the evolving financial landscape.
The Novel Activities Supervision program was initially established to provide focused oversight for emerging banking practices and technologies that were not explicitly covered by existing regulations or supervisory approaches. This included areas such as the adoption of new technologies, innovative business models, and the management of new types of financial risks.
In its announcement, the Federal Reserve Board stated its rationale for this integration, emphasizing that the lessons learned and the expertise developed through the NAS program are now sufficiently integrated into the broader supervisory practices. This allows for a more consistent and efficient application of oversight across all aspects of bank operations. The move reflects a maturation of the supervisory approach to these novel areas, enabling them to be managed within the existing robust supervisory structures.
The Federal Reserve anticipates that this integration will not diminish the rigor of its oversight. Instead, it aims to enhance the efficiency and effectiveness of supervision by ensuring that all activities, whether novel or traditional, are subject to consistent standards and review. This will allow supervisors to apply their accumulated knowledge and methodologies to a wider range of bank activities in a more unified manner.
Supervisors will continue to identify, assess, and address risks associated with novel activities as part of their ongoing engagement with supervised institutions. This includes evaluating the adequacy of banks’ risk management frameworks, governance structures, and internal controls related to these activities. The Federal Reserve remains committed to fostering responsible innovation in the banking sector while safeguarding the safety and soundness of financial institutions and the stability of the financial system.
Further details regarding the transition plan and any specific guidance for financial institutions are expected to be communicated in the coming months. The Federal Reserve Board expressed confidence that this evolution in its supervisory approach will lead to more effective and adaptable oversight as the financial industry continues to innovate.
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www.federalreserve.gov published ‘Federal Reserve Board announces it will sunset its novel activities supervision program and return to monitoring banks’ novel activities through the normal supervisory process’ at 2025-08-15 16:00. Please write a detailed article about this news in a polite tone with relevant information. Please reply in English with the article only.