first_img How should banks allocate capital for crypto? James Langton OSFI seeks to step up sector’s cyber resilience Related news Translating climate risks into financial risks takes work For example, she noted that U.S. regulators recently decided to impose tougher leverage requirements than Basel III requires on its biggest banks. “We will need to assess implications for Canada (and the Basel Committee will need to discuss implications for its own rule),” she said. “OSFI has always been accused of being a boy scout, but we are now seeing significant conservatism elsewhere.” Indeed, Dickson noted that it has also seen less resistance to tougher regulation since the crisis. Initiatives such as adopting tougher capital rules, enhancing corporate governance, having chief risk officers report to CEOs, resolution planning and stress testing have all been widely embraced. Before the crisis, things such as resolution planning were “unheard of”, and serious stress tests were considered “too dangerous”, she notes. “Globally we are striking out into new territory, in areas such as stress testing, risk appetite, risk culture, and resolution. The advances in supervisory practice over the past seven years have been amazing and I think they will bear fruit,” she said. Dickson also revisited many of the themes of her previous speeches over the years, and noted that many of the issues she’s raised from the importance of risk management to corporate governance and cybersecurity continue to be relevant. “We have seen a lot of progress occur in the last several years. But some messages warrant repeating again and again: Don’t be complacent because banks survived the crisis and emerged in good shape. Don’t downplay continuing threats (such as housing and cyber-attacks). And do continue the work on stress testing,” she said. She also stressed that the impact of a prolonged period of low interest rates must not be ignored. “While there are good reasons for low interest rates, dependence on low rates can become significant, such that a transition to higher rates could be very painful,” she warned. “This is especially true in the household sector in Canada.” While Canada has a lot of advantages, and a stable banking sector, she warned against getting too comfortable in this knowledge. “It is important to focus on our advantages and minimize the disadvantages, the main one being the risk of complacency, given how well we did in the crisis,” she said.center_img Facebook LinkedIn Twitter Keywords Banking industry Canada’s top banking and insurance regulator, Julie Dickson, says that there has been plenty of progress in enhancing financial industry regulation since the financial crisis, but that regulators and the industry should not become complacent about a range of risks. Speaking to the 2014 Financial Services Invitational Forum on Thursday in Cambridge, Ont., Dickson, superintendent at the Office of the Superintendent of Financial Institutions (OSFI) noted that in the years before the crisis there was a race to the bottom among regulators, but that now they are tacking in the opposite direction, and possibly overcorrecting. Share this article and your comments with peers on social medialast_img read more