Tailoring: an effective and efficient way to regulate and supervise banks
Michelle W Bowman, Member of the Board of Governors of the Federal Reserve System, addressed a number of issues in her speech at the American Bankers Association Community Banking Conference, Orlando, Florida, including broader monetary policy, Federal Reserve independence and also the benefits of tailoring, matching regulation to risk, to regulation and supervision which: “helps us adopt meaningful differences in regulatory requirements and supervisory expectations, depending on the size and complexity of the regulated institution, from the largest G-SIBs to the smallest community banks”. Bowman went on: “Tailoring our regulatory approach enables us to strike an appropriate balance for each relevant bank tier, with requirements that address risks, including financial stability risks, while recognizing the costs of over-regulation.”
Buy now pay later UK consultation
In October 2021 the UK Government published a consultation announcing its intention to regulate BNPL schemes. This consultation’s results were published in June 2022, confirming that both BNPL and short-term interest-free credit (STIF) schemes should fall under scope. The consultation published today asks for feedback on the approach taken in the draft legislation published alongside the consultation to implement the regulatory controls where specific legislative provision is needed to enact them.
The consultation period is open until 11th April 2023.
Romance scams highlighted
Never ones to miss a trick, several regulatory and enforcement entities including FBI El Paso; the Arizona Attorney General; and FBI Norfolk have alerted consumers to the risks of romance scams. Crypto-related romance scams in particular have been highlighted in recent months and the various alerts draw attention to the numerous scamming techniques bad actors employ.
EU-US joint regulatory forum highlights six key regulatory themes
EU participants including the European Commission, the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA), the European Central Bank (ECB), and the Single Resolution Board (SRB) and colleagues from the US including US Department of the Treasury, the Board of Governors of the Federal Reserve System (FRB), Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and Securities and Exchange Commission (SEC) have issued details of the most recent US-EU Joint Regulatory Forum.
The Forum focused on six themes:
- market developments and financial stability risks;
- particularly with regard to the Russian-Ukraine conflict
- sustainable finance and climate-related financial risks;
- mainly ongoing work on climate and other sustainability-related financial disclosures and on climate-related financial risks
- regulatory developments in banking and insurance;
- developments related to the implementation of Basel III reforms and an update on progress on the Solvency II review and the proposal for an Insurance Recovery and Resolution Directive
- operational resilience and digital finance;
- the US Treasury’s recent report on cloud services and an update on the regulation on digital operational resilience (DORA), which has just entered into force
- regulatory and supervisory cooperation in capital markets;
- the progress made on their respective legislative and supervisory efforts to promote a smooth transition away from LIBOR; and
- anti-money laundering and countering the financing of terrorism (AML/CFT)
- an overview of recent developments on AML matters, including the supranational risk assessment and public-private partnership guidance. The US team provided an update on the ongoing implementation of the Anti-Money Laundering Act of 2020, including the Corporate Transparency Act.
Participants will continue to engage on these topics, as well as on other topics of mutual interest, ahead of the next Forum meeting, which is expected to take place in Summer 2023.
A selected summary of key developments for regulated financial institutions
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