Covid-19 and banking supervision: where do we go from here?

Keynote speech by Pablo Hernández de Cos, Chair of the Basel Committee on Banking Supervision and Governor of the Bank of Spain, at the 21st International Conference of Banking Supervisors, 19 October 2020.

Good morning, good afternoon and good evening. Welcome to the 21st International Conference of Banking Supervisors (ICBS).

This is my first ICBS, following my appointment as Chairman of the Committee in March of last year. But I had long heard about its reputation as the premier global banking conference for central banks and supervisory authorities. For over 40 years since its inception, the ICBS has been a key forum for senior central bankers and bank supervisors from more than 100 countries to discuss topical supervisory issues. Its enduring success is a testament to the ongoing importance that we all attach to cross-border cooperation, a theme which I will return to. While this year's ICBS is being held in a somewhat different format, I have no doubt that it will continue to build on its historical achievements.

I would like to start by thanking Governor Macklem, Superintendent Rudin and their teams at the Bank of Canada and the Office of the Superintendent of Financial Institutions for hosting this year's ICBS virtually. I am sure that I speak on behalf of all participants in saying that we would have loved to be in Vancouver, the vibrant heart of beautiful British Columbia. But we can still recognise the fitting choice of this virtual venue. Vancouver has long been the financial centre of British Columbia's resource economy. A recent history of this role vividly depicts how "stock brokers, financial agents and bankers played essential roles as intermediaries in the fluid commercial life of early twentieth-century Vancouver". What's more, the Vancouver Stock Exchange was incorporated in 1907 - almost 30 years before the Bank of Canada was founded!

Tiff and Jeremy, while we may be physically distanced around the world at this year's ICBS, you and your organisations have done an excellent job at ensuring that we remain socially together this week. Thank you.

The overarching theme for this year's ICBS - the future of supervision in a changing world - is perhaps more relevant than ever before. The world has changed profoundly since the outbreak of Covid-19 seven months ago. The uniqueness of the sudden stop to the global economy in response to the tragic health crisis is only matched by the sheer uncertainty about the outlook. To borrow a sports metaphor, we still do not know if we are in the first inning, quarter or half of this crisis. Uncertainty is the only certainty there is.

So what is the future of supervision in this changing world, and what can we learn from the current crisis? When the former Chinese premier Zhou Enlai was asked in 1972 about the impact of the French Revolution of 1789 - or, as is now generally accepted, the civil unrest of May 1968 - he famously replied that it was "too early to say". Given that we've yet to reach the four year mark since the start of the pandemic - let alone the 184th anniversary! - it would be premature to provide a definitive discourse at this stage.

Yet we have already seen fundamental changes to the way we live and work. For example, we witnessed a tremendously rapid shift to remote working arrangements across many sectors. Professor Prithwiraj Choudhury will discuss the implications of the 'working from anywhere' geographic flexibility in more detail on Wednesday, and we will have the opportunity to discuss what this means for supervision. These changes, whether temporary or permanent, offer some clues about the future landscape.

So there is merit in starting a discussion about what we have learned to date and, more importantly, the future and changes that we want to see in banking supervision. Allow me to outline some personal thoughts on these issues, which may not necessarily represent the view of the Basel Committee.