By Rodney E. Hood, Former Acting Comptroller of the Currency, Office of the Comptroller of the Currency (OCC)
In the shadow of the Austrian Alps, at the Salzburg Global Finance Forum, I found myself reflecting not only on the grandeur of that historic city but also on the music it has given the world. The works of Wolfgang Mozart, Joseph Haydn and Ludwig van Beethoven endure because they balanced structure with experimentation and discipline with innovation. In many ways, this is the score we must compose for the future of financial regulation.
Regulators must pursue more than safety. We must foster innovation. We must enable inclusion. And above all, we must evolve.
As the former Acting Comptroller of the Currency (until July 15, 2025, when Jonathan V. Gould was appointed as Comptroller of the Currency), I had the privilege of overseeing the safety, soundness and fairness of the US federal banking system. That system has long stood as a bulwark of global financial stability. But in our age—defined bytechnological disruption, systemic risk and global interdependence—regulators must pursue more than safety. We must foster innovation. We must enable inclusion. And above all, we must evolve.
Regulation for resilience: Capital reform with vision
The foundation of sound banking is strong capital. It is the first line of defense against financial shocks. But capital reform should not be an exercise in redundancy. The United States, in implementing the final Basel III standards (of the Bank for International Settlements, or BIS), is seeking to uphold financial resilience while remaining sensitive to the realities of competitive balance and credit access.
Our goal is clear: a capital framework that is strong, forward-looking and capital-neutral in aggregate. That is, we aim to strengthen the financial system without constraining economic growth or innovation.
To achieve this, capital requirements must be risk-sensitive and appropriately calibrated. The enhanced supplementary leverage ratio (eSLR) is a case in point. Originally intended as a backstop to risk-based capital, in practice, the eSLR now risks becoming a binding constraint. US regulators—the Federal Reserve (the Fed), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC)—are working together to recalibrate it to better reflect economic realities. This is not regulation by silos. It is regulation by collaboration.
At the Basel Committee on Banking Supervision (BCBS), I reaffirmed America’s support for global standards while emphasizing the importance of proportionality and local context. As financial systems differ in size and structure, so, too, must their frameworks for resilience. A global consensus is emerging that refinements are not a retreat from reform but an affirmation of its purpose.
Innovation as a supervisory imperative
If capital adequacy is the floor, innovation is the scaffolding that helps financial institutions grow and serve customers. That is why regulatory agencies must be proactive, not passive, in enabling responsible innovation.
At the OCC, we were early pioneers in this space. Nearly a decade ago, we established the first Office of Innovation among US federal banking regulators. Today, its successor—the Office of Financial Technology—plays a vital role in facilitating the safe and sound adoption of new technologies and business models.
The OCC engages with banks across the spectrum—large, regional and community institutions—to support modernization. This includes everything from virtual office hours and TechSprints to issuing supervisory guidance on artificial intelligence (AI), machine learning (ML) and digital identity.
Importantly, we have recognized that innovation should serve not only shareholders but also society. One recent example is our conditional approval of a national bank’s transformation into a tech-driven lender focused on small businesses in underserved communities. This is innovation in the service of inclusion—and a demonstration that safety, soundness and social purpose can coexist.
Our efforts are also international. Through collaboration with the Bank for International Settlements (BIS) Innovation Hub and peer regulators, we are strengthening our collective capacity to supervise novel financial activities. These dialogs matter. They ensure that innovation is not constrained by borders and that risk management evolves alongside progress.
Clarity, consistency and a technology-neutral framework
Innovation thrives on clarity. One of the most significant barriers to innovation is regulatory ambiguity. Markets stallwhen institutions are unsure of the rules. That is why regulatory clarity must be a central goal for every financial supervisor.
When I assumed office as Acting Comptroller in early 2025, uncertainty was growing around digital-asset activities—particularly those involving stablecoins and custody services. In response, we replaced the outdated “non-objection” framework with a principles-based approach. Rather than requiring ad hoc approvals, we now evaluate whether its digital-asset activities align with a bank’s risk profile and strategic plan. The message was simple: Clarity is not a luxury; it is a necessity.
Our approach is also technology-neutral. Whether a bank operates through traditional infrastructure or decentralized ledger technology (DLT), the same supervisory principles apply: safety, soundness, fairness and consumer protection.
Additionally, we enhanced supervisory transparency by removing “reputation risk” as a stand-alone basis for regulatory intervention. Business decisions, as long as they comply with the law and prudent risk management, should be made by banks, not regulators. This shift returns supervisory focus to objective risk analysis, not subjective perception.
We also streamlined merger-application procedures for well-managed institutions, recognizing that consolidation, when executed prudently, can strengthen operational resilience and broaden financial access.
Inclusion: The North Star of modern supervision
Innovation without inclusion is hollow. A truly modern financial system must expand access to opportunity. That is why financial inclusion must be treated as a core component of safety and soundness, not a separate or secondary issue.
Throughout my career, I have viewed financial inclusion as the civil-rights issue of our time. Access to affordable credit, safe deposits and trusted financial advice is not a luxury. It is a prerequisite for economic mobility, household stability and community development.
The rise of financial technology has brought new tools to reach those who are underserved. However, it has also introduced new risks: algorithmic biases, digital redlining and disparities in access to digital infrastructure. Regulators must ensure that innovation does not widen the gap but narrows it.
This requires better data, smarter oversight and meaningful engagement with consumers and civil society. It also means working across regulatory and policy boundaries. At the OCC, we’ve done this through initiatives such as Project REACh (Roundtable for Economic Access and Change), which brings together banks, civil-rights groups and technology firms to remove barriers to credit.
Inclusion is not charity. It is risk mitigation, market expansion and nation-building.
A blueprint for the future
As we look ahead, the regulatory community must reimagine its own role—not merely as the enforcer but also as the convener, collaborator and catalyst. The core principles—capital strength, risk sensitivity, consumer protection and institutional fairness—remain foundational. But how we apply them must evolve.
Here are five principles that should guide the next chapter of financial supervision:
- Regulatory frameworks must be dynamic, not static. Supervisors must build flexibility into their approaches to accommodate rapid technological change.
- Risk-based proportionality must be the Institutions don’t all pose the same risks, and our oversight should reflect that.
- Cross-border coordination must deepen. Financial activity is global, and so must be our standards and crisis
- Inclusion must be Every innovation must be assessed for its potential to expand—or restrict—access.
- Public trust must be earned through Supervisory decisions should be clear, consistent and communicated in ways that foster understanding.
Conclusion: Composing a new regulatory score
Beethoven once said, “Music is the mediator between the spiritual and the sensual life.” In the financial world, regulation is the bridge between innovation and integrity, between progress and prudence.
We must compose our regulatory frameworks like a great score: with structure, clarity and room for expression. We must design systems that are resilient, responsive and inclusive, and yet efficient.
As Haydn once remarked, “There was no one near to confuse me, so I was forced to become original.”
May we all summon the originality, courage and wisdom to build a financial system that serves not only markets but also people—and not only for today but also for generations to come.
Rodney E. Hood is former Acting Comptroller of the Currency and past Chairman of the National Credit Union Administration (NCUA). A Salzburg Global Fellow and member of the World Economic Forum (WEF), he has held senior leadership roles in government and with Wall Street firms. He currently serves on the boards of FHLBank Atlanta and Zest AI, advancing regulatory reform, digital innovation and financial inclusion.