Vice Chair Bowman Announces Financial Regulation Overhaul and AI Support Policies

Michelle Bowman, the Vice Chair of the U.S. Federal Reserve's Office of Supervision, announced plans to reform financial regulations with a focus on risk and to support the introduction of new technologies such as artificial intelligence (AI). Speaking at the Bank Policy Institute conference in London on the 13th, he emphasized the need to modernize supervision and regulation to keep pace with the evolution of the financial system. Vice Chair Bowman referenced the case of Silicon Valley Bank (SVB) bankruptcy, stating that having numerous supervisory findings does not necessarily enhance supervisory effectiveness. He indicated that future supervision will focus on core risks that have a tangible impact on the soundness of financial institutions. Additionally, he stressed the need to improve the approach of applying the same regulations to all banks, advocating for differentiated application between regional banks and large banks. Recognizing AI as a key innovative technology in the financial industry, he introduced a best practices report for the responsible use of AI. He also announced plans to simplify risk-based capital regulations through amendments to Basel III and to automatically adjust asset size criteria in line with economic growth. The Financial Stability Board is expected to announce principles for modernizing financial regulation this fall.

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