“Supervisors in other jurisdictions have adopted approaches based in behavioral science that incorporate data on institutional attitudes and norms related to risk factors, such as complacency, overconfidence, short-term focus, and lack of effective challenge that can reveal institutional blind spots and contribute to vulnerabilities like those seen at SVB,” Fed’s Vice Governor for Supervision Michael Barr noted in his April report to Congress on the collapse of SVB. “The Federal Reserve could investigate these tools through a pilot program,” Barr suggested.
In recent years, several banking sector regulators and supervisors have experimented with the kinds of supervisory approaches to which Barr refers. To focus only on the Asia-Pacific, for instance, in 2020 the Hong Kong Monetary Authority reported on findings it achieved through a bank culture self-assessment program, following the announcement of supervisory measures for bank culture issued in December 2018.1 [See the 2020 Update | Hong Kong]
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