Speech from the Superintendent at the Global Risk Institute Summit 2025

Check against delivery

There is an old saying that there are decades when nothing happens and weeks where decades happen. The present day seems closer to the latter part of that framework. The year 2025 has reminded me of the period dating 1989-1991 where it seemed that every morning brought a new, amazing headline as the world lived through the end of the cold war.

The current era is no less bracing than that time. From escalating geopolitical instability and cyber threats to climate change; from domestic economic shifts to technological innovation; the risks and opportunities facing Canadian financial institutions are complex and consequential. Just like our country, Canada’s financial system is navigating through a period of profound uncertainty.

One can confront this uncertainty with trepidation, fear, optimism, or a mix of all three. With humility towards the uncertainty that is always present, I would like to emphasize optimism today.

Over the last 15 years, the boards of OSFI’s regulated constituents have built enduring resilience into Canada’s financial system; with encouraging support from their friendly financial institution supervisor. Their efforts have proven to be both necessary and effective.

For example, Canada’s systemically important banks reported Common Equity Tier 1 (CET1) ratios that averaged 13.7% in the most recent quarter, 220 basis points above the floor for a well-capitalized, systemically important bank. One way to think about that is that the denominator of the CET1 capital ratio, risk-weighted assets, could rise by approximately $500 billion before that ratio hit 11.5%. In layperson’s terms, banks could make nearly $1 trillion in loans, or other extensions of credit, and remain above current capital minimums; a material figure to Canada’s $3 trillion economy. Here is a reason for optimism: Canada’s banks have ample capacity to help fund the country’s adjustment to this new era. Elsewhere, Canadian life insurers have boosted their core capital ratios by 13% over the past 6 years and maintain ample capital buffers that can be similarly leveraged for new investments in the Canadian economy.

Since the global financial crisis, OSFI has also implemented requirements for financial institutions’ liquidity and for protections against integrity & security (or non-financial) risks.

On the basis of this evidence, I am confident in stating that the Canadian financial system is as resilient as it has ever been. Unusual for a financial institution supervisor to declare, I know, and I refer again to the humility I have about the uncertainty we face. Resilience is not a guarantee, it is an asset and one that is finite at that.

But I do believe Canada’s financial system is in a strong position to help the economy adapt to our new economic environment. Indeed, the system’s resilience is a strategic advantage to be leveraged to support Canadian businesses and households as the country adapts. When banks, insurers, and pension plans are well-regulated, adaptable, and capable in managing their risks, Canadians benefit: from reliable access to credit and financial services to stronger support for businesses and communities. At OSFI, we believe a resilient financial system isn’t just a safeguard—it’s a catalyst for national prosperity.

So what can OSFI do now to help Canada’s federally-regulated financial institutions help the country and the economy adapt?

We will be answering that question for the next several years, and I suspect the answer will change as the environment changes. But let me give you three overarching answers for OSFI right now:

1. Be proactive – always be advancing
2. Look for opportunities to support competitive balance
3. Look for opportunities to support innovation and ease the burdens for entry

1. Be proactive – always be advancing

Driven by events outside our control, we at OSFI have adopted a guiding principle — Always Be Advancing — which compels us to act early, think strategically, and remain outcome-focused in this era of uncertainty. We continue to modernize our regulatory approach to be more agile, transparent, and risk-intelligent—eliminating outdated guidance, adjusting regulatory intensity, and pausing select initiatives based on continuous industry engagement and a commitment to smart, effective oversight.

For example, in 2024, we rescinded 20 guidelines and industry advisories, with more to come this November. Earlier this year, we paused increases in the Basel III output floor to ensure that competitive balance prevails for Canadian banks that compete in the international banking system. In July 2025, we announced a reduction in capital requirements for Canadian infrastructure debt and equity investments made by OSFI-regulated life insurers.

We plan on announcing more pro-active regulatory initiatives to help our regulated constituents help the country. We will be looking at relative risk-weightings for banks and will consult with industry constituents and public sector partners on the capital treatment of certain types of loans to encourage business lending by banks in support of the economy.

2. Look for opportunities to support competitive balance

As I mentioned a minute ago, we did pause our implementation of Basel III to help our internationally active banks compete more effectively against global peers. In OSFI’s mandate, Parliament instructs OSFI to have due regard to the need to allow financial institutions to compete effectively and take reasonable risks. In our view, an OSFI that follows Parliament’s instructions is an OSFI that respects competition and competitive balance.

Competitive balance does not start at the water’s edge, it is a grass-roots concern. To support competitive balance domestically, we have a number of initiatives on the go. Earlier this year, we engaged with small- and medium-size lenders about changes to capital requirements that will enable them to compete more effectively while ensuring their risk-taking remains reasonable. We also continue to engage with smaller institutions about how we could reduce some regulatory burden so that management teams have more time and resources to face the uncertainty ahead. You will hear more from us on this in November.

3. Look for opportunities to support innovation and ease the burdens for entry

New entrants can give financial institution supervisors heartburn. The problem is that some new entrants succeed while others fail. And public servants have, like me, varying tolerance levels for failure.

Since 1996, Canada has not had a deposit-taking institution fail. In the same time frame, the U.S. banking system absorbed over 500 failures. Meanwhile, the Global Failed Insurer Catalogue (PDF), produced by Canada’s PACICC,^{Footnote 1} lists just 7 insurer failures in Canada since 2000 (not all of them OSFI supervised), amongst a catalogue of 547 insurer failures. I think it reasonable to conclude that OSFI could adjust its risk appetite with regards to new entrants.

At OSFI, we will revamp our approvals process to ease entry and, with that, mature our tolerance for risk. We aim to find opportunities for more timely approval of new entrants to the banking sector.

Given the extraordinary innovation in financial services, particularly digital money innovations like stablecoins and digital deposit receipts, the time is right to look at streamlining our approvals process.

In addition, we will continue to look for opportunities to stay out of the way of innovators already in our system as they develop new products based on distributed ledgers or other expanding technologies. When our regulated constituents bring OSFI ideas and request either support or non-disapproval, our first instinct will be to avoid impeding innovation.

Obviously, innovation and new entrants bring risk and other financial systems’ experiences provide a warning against over-aggressiveness. To guide us, OSFI will reinforce our simple regulatory principle for innovation: same activity, same risk, same regulatory principles.With an unwavering focus on a resilient financial system, innovation, and public confidence, we will enable Canadian financial institutions to play a central role in reinforcing Canada’s economic strength in this era of great uncertainty.