Peter Routledge participates in a fireside chat at The Logic Summit

Check against delivery

Moderator:

Is anything today bringing back memories of the 2007-09 global financial crisis (GFC)?

Superintendent Peter Routledge:

• After GFC we strengthened our regulatory guardrails.
• Housing market: not in red zone. Good/sound underwriting.
• Pendulum swing: Put the past in the past. We should build on the lessons of the financial crisis without letting the past define our response to what comes next.
• Resilience remains central, but we also need to support competition and innovation, capitalizing on Canada's strengths and the safety net supporting our largest banks.
  • Policy modernization + DSB
  • Streamlined Approvals Framework for Targeted New Entrants
• Vulnerabilities remain elevated and warrant close monitoring, but they are not a signal of impending instability. Canada's largest banks remain well capitalised, and OSFI judges that banks have substantial capacity to absorb losses should risks materialise.

Moderator:

Balance financial stability and growth. What caused you to move faster?

Superintendent Peter Routledge:

• Reason: Shock to trade model
• Overly cautious OSFI = overly cautious banking system
• Risk appetite statement to get better outcomes (example: DSB)

Moderator:

Expanded mandate and shift in OSFI's risk appetite?

Superintendent Peter Routledge:

• Parliament expanded OSFI's mandate in 2023 because threats such as foreign interference, cyberattacks, fraud and money laundering can undermine the integrity of individual institutions and the resilience of the broader financial system.
• We built resilience in the late 2000s and post GFC. There are no new imperatives and while resilience remains our primary objective, we have to take into competition and innovation which requires us to revisit our risk appetite.
  • Includes accepting the risks of acting early and ensuring OSFI does not contribute to excessive risk aversion.
• Reviewing whether our regulatory expectations are appropriately targeted and proportionate, including where costs may not deliver a commensurate prudential benefit.
• Given that we are making decisions in a more complex risk environment, it is probably a good assumption that OSFI's mandate will not remain static.

Moderator:

How OSFI is organizing itself internally to support that shift in risk appetite?

Superintendent Peter Routledge:

• Regulatory/policy modernization
• Streamlined approvals framework gives eligible new entrants (fintechs) a quicker, clearer and more predictable path into the federal financial system, with a more focused, risk-based assessment.
• New senior leaders Jing Yang and Josée Turcotte bring deep expertise in financial stability, risk management, regulation, and governance to support OSFI's evolving mandate.

Moderator:

What should we be thinking about? How do AI and the changing world order affect OSFI's approach?

Superintendent Peter Routledge:

• Disruptions:
  • Frontier AI can increase the speed and scale of operational, model, cyber and governance risks, while also offering productivity opportunities for financial institutions and OSFI.
  • Tokenized deposits.
• The international economic system is becoming more fragmented, with trade and investment relationships being reconfigured.
• Resilience remains fundamental, but we also need to consider whether our regulatory and supervisory approaches create room for responsible competition, innovation, and new entrants.
• Actions include a streamlined path for eligible new entrants, proposed more proportionate capital requirements for smaller banks, and broader regulatory modernization.
• OSFI may introduce additional AI guidance in line with the Financial Stability Board's sound practices. Minimum viable standard.
• As the world changes, Canada needs to adapt, and OSFI wants to support that adaptation rather than become a barrier to it. (Example DSB)