Implementation, innovation and interconnections

Keynote remarks by Erik Thedéen, Chair of the Basel Committee on Banking Supervision and Governor of Sveriges Riksbank, at the 2025 Institute of International Finance Annual Membership Meeting, Washington DC, 15 October 2025.

Introduction

Good afternoon, and thank you for inviting me to this IIF Annual Membership Meeting.

I'd like to start by offering brief remarks on three I's: (i) (Basel III) implementation; (ii) innovation; and (iii) interconnections.

Basel III implementation

First, on Basel III implementation. There's been no shortage of discussion about the fate of Basel III and countless speculation about the future of global standards.

My message today is simple: the reports of the death of global cooperation are greatly exaggerated. Basel III implementation is on track and entering its final stretch. More than three quarters of our member jurisdictions have implemented the standards (80% have implemented the credit risk and output floor standards which form the bulk of the reforms). And I remain confident that all remaining jurisdictions will implement them in due course. Indeed, the Group of Central Bank Governors and Heads of Supervision, the Basel Committee's oversight body, recently unanimously reaffirmed its expectation to implement Basel III in full and consistently.¹

The reason for my optimism is simple: all Basel Committee members recognise that divergence or delays in implementing global standards can result in an unlevel playing field, create room for regulatory arbitrage and ultimately weaken the ability of the global banking system to support households and businesses in times of stress. The Basel III standards were carefully designed and calibrated to reflect inputs received from external stakeholders. If implemented based on the globally agreed design and calibration, they are not expected to result in a significant increase in global capital requirements.

Innovation

Second, innovation in finance is accelerating, with particular momentum around tokenisation and the broader crypto finance system. Some of these developments hold promise, but they also raise important questions for prudential regulation and supervision.

The Committee was one of the first global standard-setting bodies to work on cryptoassets. In 2019, we published initial supervisory guidelines. In 2022, we finalised the first global prudential standard for banks' crypto exposures, which were revised in 2024 and accompanied by a disclosure framework. We are now closely monitoring their implementation and continue to assess market developments.

An overarching principle in our work on crypto is simple: we aim to ensure that innovation contributes to, rather than undermines, the resilience of the financial system. We are not in the business of stifling innovation and growth. But equally, we hold a duty to households and businesses to ensure that banks adopt a responsible and informed approach to engaging with innovative products and technologies. The costs of banking crises are simply too high – let us never forget this point.

Interconnections

Third, supervisors are operating in a challenging environment. Uncertainty has reached all-time highs. Geopolitical tensions continue to brew. And the global financial system is experiencing significant structural changes.

Against this backdrop, our priorities remain clear. Strong bank governance and risk management are non-negotiable foundations for resilience. This must be complemented by strong and effective supervision, including both the ability and willingness to act. The Committee is contributing to such goals by sharpening our focus on the interlinkages between banks and non-bank financial intermediation, where hidden leverage and liquidity mismatches can amplify stress. The recent growth in synthetic risk transfers – where banks "transfer" risks to a non-bank financial intermediary – is an example of such interconnections which the Committee is investigating. We are also focusing on strengthening operational resilience, particularly when it comes to information and communication technology resilience and third-party dependencies, as these can pose systemic challenges in an increasingly digitalised financial system.

Conclusion

Let me conclude. These three themes: (i) Basel III implementation; (ii) responsible digital innovation; and (iii) mapping and assessing risks from interconnections, are themselves interconnected. Together, they help ensure a resilient, trusted global banking system that can continue to serve households and businesses through all phases of the cycle.

Risks do not respect borders. This is why cross-border supervisory cooperation will also be indispensable. And this is why the Committee will continue to be at the heart of cross-border collaboration in strengthening the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability.

¹ Basel Committee on Banking Supervision, "Governors and Heads of Supervision reaffirm expectation to implement Basel III and discuss work on financial impact of extreme weather events", May 2025.