Speech from Superintendent Peter Routledge at the Global Risk Institute Summit 2025

TORONTO, Sept. 19, 2025 /CNW/ - On September 17, 2025, Peter Routledge, Superintendent of Financial Institutions gave a speech and participated in a fireside chat at the Global Risk Institute's Summit 2025. The event took place in Toronto, Ontario, at the Toronto Region Board of Trade, and was hosted by Sonia Baxendale, President and CEO of the Global Risk Institute.

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Peter Routledge, OSFI Superintendent (left), Sonia Baxendale, President and CEO, Global Risk Institute (right) at the Global Risk Institute Summit 2025. (CNW Group/Office of the Superintendent of Financial Institutions)

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 additional 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 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 regulators heartburn. The problem is that some new entrants succeed while others fail. And public servants have 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, produced by Canada's Property and Casualty Insurance Compensation Corporation, lists just 7 insurer failures in Canada since 2000 (not all of them OSFI supervised), amongst a catalogue of 547 insurer failures. Given these statistics, 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 tokenized deposits, 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.

Moderator:
You've said OSFI is looking to reduce regulatory burden where possible. Can you give us some concrete examples of where you see opportunities to do that, while still maintaining resilience?

Superintendent Peter Routledge:

• On August 18, I laid out how we are continuing to make regulatory efficiency a discipline in OSFI. We're reducing the scope and timing of certain integrity and security data requests, shifting the corporate governance consultation to focus on the most material issues, and eliminating redundant data collections. Those changes free up capacity without compromising resilience.
• On supervision, we're being more measured in how we apply intensity. Operational risk supervision is tough — and rightly so — but we're recalibrating how we stage and intervene, so the oversight matches the risk profile, not a one-size-fits-all approach.
• In capital, we're making targeted adjustments. We paused Basel III implementation of the "output floor" to ensure that competitive balance prevails for Canadian banks that compete in the international banking system and to provide Canadian banks with transparency and predictability in OSFI's capital expectations.
• At the same time, we're not loosening everywhere. On anti-money laundering, for instance, the trajectory is still tighter — because the risk environment demands it.

Moderator:
You've said AML is a prudential issue. With the federal Strong Borders Act (Bill C-2) on the table and the Financial Action Task Force (FATF) review coming up later this year, how concerned are you about AML right now — and what's changing in how OSFI will supervise it?

Superintendent Peter Routledge:

• AML is a prudential risk. Weak AML controls can erode integrity and confidence, which in turn threaten safety and soundness. That's why we treat AML as part of our integrity and security risk lens and a priority in our risk outlook.
• No other regulator has a mandate to ensure federally regulated financial institutions (FRFIs) have policies and procedures in place to protect themselves from threats to their integrity and security and from foreign interference.
• Our Integrity and National Security team engages closely with domestic security and intelligence partners as well as our international counterparts to identify threats to FRFIs. By bringing together classified and unclassified information, our team can look at a holistic picture of the integrity and security risks institutions face. That includes influence from foreign jurisdictions.
• Bill C-2 strengthens coordination. If Parliament passes Bill C-2, FINTRAC will join the Financial Institutions Supervisory Committee (FISC). I would be very pleased to welcome FINTRAC at that table. It will facilitate information exchange and allow us to respond more quickly through supervision.

Moderator:
To what extent are OSFI's actions driven by what happens south of the border, especially when we see deregulatory trends in the United States?

Superintendent Peter Routledge:

• Canada's financial system is navigating a period of profound uncertainty. From escalating geopolitical instability and cyber threats to climate change and domestic economic shifts, the risks facing financial institutions are complex and consequential. Canada is a North American economy, and our banks and insurers compete in the U.S. market, so we cannot ignore changes in their regulatory environment.
• Over the last 15 years, OSFI has built enduring resilience into Canada's financial system. These efforts have proven to be both necessary and effective. That resilience is a strategic advantage that can be leveraged to support growth in the Canadian economy. This is not a departure from our core mandate: it's a bold extension of it. A strong, stable financial system isn't just a safeguard—it's a catalyst for national prosperity.
• OSFI has proactively established an annual discipline of refining our regulatory guidelines and advisories to find opportunities to remove unnecessary burden. Our focus has been clear: reduce regulatory burden where possible, sharpen our focus on the most important risks, and ensure institutions remain resilient in an uncertain risk environment.
• We adjust when necessary. For example, last year we paused the Basel III output floor because the gap with international peers, including the U.S., had widened beyond what we were comfortable with. That was about preserving a fair playing field while keeping resilience intact.
• With an unwavering focus on a sound financial system, innovation, and public confidence, we will continue to enable Canadian financial institutions to play a central role in building Canada's economic strength.

Moderator:
If we see more deregulation in the U.S. and tariffs start to have more impact, how will OSFI make sure Canada stays competitive while still maintaining its risk posture?

Superintendent Peter Routledge:

• We will be proactive. You can expect us to act early, not wait. When risks shift, we look ahead, anticipate, and adjust our approach before Canadian institutions are at a disadvantage.
• Our approach is incremental. We make changes in measured steps, not sudden swings. That gives boards and executives clarity and time to adjust, while ensuring the system stays safe.
• A strong, stable financial system isn't just a safeguard — it's a catalyst for national prosperity. Canada's financial system is built on resilience, and that resilience is a strategic asset.
• We respond with prudence. Whether it's tariffs or U.S. deregulatory moves, you should expect a prudent response: one that protects depositors and policyholders while enabling institutions to support Canada's economy through uncertain times.

Moderator:
What is OSFI doing that might help small and medium-sized businesses access the capital they need to grow?

Superintendent Peter Routledge:

• We continue to work to identify where and how we can best align capital requirements with actual risk. Regulatory efficiency reduces unnecessary capital strain without compromising safety and soundness and supporting the competitiveness of our financial institutions where warranted. This frees up capacity that banks can use to extend more credit.
• More broadly, OSFI has been focused on regulatory efficiency where possible, by honing on the most important risks, and ensuring institutions remain resilient in an uncertain world. We have proactively established an annual discipline of refining our regulatory guidelines and advisories to find opportunities for regulatory efficiency.

SOURCE Office of the Superintendent of Financial Institutions