Basel Committee Chair Warns of Global Banking Supervision Fragmentation
Erik Thedéen warns that declining international cooperation among banking supervisors increases cross-border financial risks and regulatory arbitrage.
The Chair of the Basel Committee on Banking Supervision, Erik Thedéen, warned that international cooperation among banking supervisors is declining even as financial risks become more interconnected. Speaking at the 24th International Conference of Banking Supervisors in Bali, Thedéen stated that fragmentation in supervision could widen information gaps, increase opportunities for regulatory arbitrage, and make cross-border risks harder to manage.
Thedéen noted that geopolitical tensions are clouding the outlook for coordination on critical issues, including artificial intelligence and the management of future financial crises. He specifically emphasized the necessity of independent central banks, citing recent tensions between the administration of U.S. President Donald Trump and the Federal Reserve.
These warnings come amid ongoing delays in the United States regarding the full implementation of the final Basel III reforms. These reforms were designed to increase global bank resilience by establishing higher capital and liquidity requirements.
