The end of the year is often a time to look back on the events of this past year, but it is also time to look forward to the new year. With the promise of a vaccine to provide the world with relief, it remains difficult to look back as we often do during this time of year. Don’t get me wrong, the many remarkable stories of how credit unions helped the world through the crisis is one that needs to be lauded. But many of us are ready to move past the crisis and are looking for signs that we will return to normalcy. I am optimistic for our future, but many challenges remain.
So, I offer a few forward-looking thoughts from a regulatory perspective on how 2021 might play out for credit unions. Look for the recovery to be slow, rocky and uneven. International standard setting bodies will primarily monitor ongoing economic events, but they will also look to unwind some of the relief measures (use of capital buffers, accounting relief, etc.). As forbearance and moratoriums end, look for increases in non-performing loans and recognition of bad loans. This will coincide with the withdrawal or ending of accounting relief measures. We will look closely to see how regulators deal with troubled institutions (could this lead to consolidation in the banking sector?). Also, expect regulators to encourage and embrace the acceleration of digitization that took hold during the pandemic.
Finally, I urge you to look at the G20 Leader’s Declaration which gives us insight into the regulatory agenda for the financial sector. It includes items such as reforms to payments, climate change, AML/CFT, financial inclusion and women’s empowerment.
It will certainly be a long and hard road for many next year. The good news is that there is clearly a light at the end of the tunnel. Indeed, it will be a “new” year from a regulatory perspective.
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