The Financial Stability Oversight Council (FSOC), chaired by the U.S. Department of the Treasury, unanimously approved and released its 2025 annual report, setting out its assessment of key U.S. financial stability risks and associated policy recommendations. The report concludes that U.S. financial markets and institutions functioned effectively in 2025, and restructures its content around priority areas of focus paired with actionable recommendations. On Treasury market resilience, FSOC backs continued work by the Inter-Agency Working Group on Treasury Market Surveillance and use of its new Market Resilience Working Group, supports the Securities and Exchange Commission’s implementation of a central clearing mandate for Treasuries, and endorses banking agencies’ final rule amending the enhanced supplementary leverage ratio to improve intermediation capacity, while recommending monitoring of developments including potential new Treasury central counterparties and implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. On cyber risk, it calls for expanded joint monitoring and information sharing, greater use of scenario-driven tabletop exercises, increased public-sector use of artificial intelligence, stronger coordination on third-party service provider examinations, and congressional action to ensure the Federal Housing Finance Agency has adequate examination and enforcement powers for third-party risks, alongside steps to address quantum-related cryptographic risks. The report also endorses 2025 banking agency and National Credit Union Administration actions to enhance oversight of banks and credit unions, encourages further modernization and clearer supervisory expectations including defining “unsafe or unsound practice,” and promotes reducing compliance costs for community banks, while recommending that FSOC’s Artificial Intelligence Working Group be used to pursue resilience-enhancing applications and monitor emerging AI-related financial stability risks, with continued domestic and international coordination.
U.S. Department of the Treasury 2025-12-11
U.S. Department of the Treasury’s FSOC approves 2025 annual report with recommendations on Treasury market resilience, cyber risk, bank supervision and AI
The Financial Stability Oversight Council, chaired by the U.S. Department of the Treasury, released its 2025 annual report, highlighting U.S. financial stability risks and policy recommendations. Key areas include Treasury market resilience, cyber risk management, and enhanced oversight of banks and credit unions. The report emphasizes using artificial intelligence for resilience and calls for modernizing supervisory expectations and reducing compliance costs for community banks.