In a speech, Federal Reserve Board Vice Chair for Supervision Michelle Bowman outlined four principles she said should guide efforts to modernize financial regulation and supervision through the Financial Stability Board's Standing Committee on Supervisory and Regulatory Cooperation. The framework centers on focusing supervision on material financial risks, tailoring requirements to each institution's risk profile, improving transparency and accountability in supervisory processes, and keeping regulation forward-looking so it can address emerging risks while supporting responsible innovation. She said the Financial Stability Board is preparing a public consultation report for the fall and used recent U.S. measures to illustrate how those principles are being applied in practice. Bowman highlighted capital framework reform as a main U.S. priority, referring to the Federal Reserve's 2026 Basel III proposal published in March for public comment. She said the proposal would simplify the framework by moving large banks to a single stack of risk-based capital requirements, recalibrating the global systemically important banks surcharge, reducing overlap between stress testing and risk-based requirements, and indexing the surcharge to nominal economic growth. She also pointed to the recent publication of Supervisory Operating Principles, work to update fixed asset thresholds by indexing them over time, and changes to examination findings so that material safety and soundness issues are distinguished from less severe supervisory observations. On technology, she referred to the Financial Stability Board's recent consultation on sound practices for responsible adoption of artificial intelligence, describing it as principles-based guidance rather than a prescriptive standard. Bowman said the comment period on the capital proposal has closed and the Federal Reserve is evaluating feedback as it works to finalize the rules. She also said the Financial Stability Board's modernization report will be published for consultation in the fall and then delivered to the Group of Twenty.
Federal Reserve Board2026-07-13
Federal Reserve Board outlines four principles for modernizing regulation and supervision, points to fall Financial Stability Board consultation
In a speech, Federal Reserve Board Vice Chair for Supervision Michelle Bowman set out four principles for modernizing regulation and supervision, focused on material risk, proportionality, transparency and forward-looking oversight. She said the Financial Stability Board will publish a consultation report in the fall and pointed to U.S. work on capital reform, supervisory principles, threshold indexation and revised exam findings as examples.