Basel chief says risks becoming more interconnected as international cooperation wanes
XLF•Basel Committee Chair Erik Thedéen said international cooperation among banking supervisors is becoming more difficult as financial risks grow more interconnected. He warned that fragmented supervision could widen information gaps and make cross-border risks harder to identify and manage.
1. Supervisory coordination concerns
Thedéen said geopolitical tensions are clouding the outlook and raising questions about how supervisors and other agencies will coordinate on risks including artificial intelligence and responses to a future financial crisis. He warned that fragmentation in supervision could contribute to fragmentation in finance, increase opportunities for regulatory arbitrage and make cross-border risks harder to manage.
2. Basel III implementation
The Basel Committee led the post-financial-crisis overhaul of global banking rules, including Basel III, which raised capital and liquidity requirements aimed at making banks more resilient. The United States has yet to implement the final Basel III reforms in full; regulators withdrew an earlier proposal after industry opposition and published a revised draft in March.
