In a recent essay for the LSE Systemic Risk Centre's Forum on Financial Supervision, former Acting US Comptroller of the Currency Michael Hsu argues that, in the face of today's challenges, banking supervisors must "10x" their performance or risk falling behind the system they are meant to safeguard.
Hsu points to four irreversible trends reshaping the landscape: ever-larger and more complex banks, blurred boundaries with nonbanks, rapid technological and market shifts, and mounting public scrutiny that leaves little margin for supervisory error. "For supervision to remain effective in the face of these trends, supervision must cover more, faster, and better," he writes. "Incremental improvements will not suffice given the pace and interactive effects of these trends. In techspeak, supervisors must '10x' – and they must do so in the face of headcount reductions, fading memories of financial crises, and political calls to prioritize competitiveness."
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