Bank Supervision

Definition ∞ Bank supervision involves the oversight and regulation of financial institutions by governmental or quasi-governmental authorities. This process aims to ensure the safety and soundness of the banking system, protect depositors, and maintain financial stability. Supervisors monitor banks’ risk-taking activities, capital adequacy, and compliance with laws and regulations. The effectiveness of bank supervision is a recurring theme in financial news, impacting market confidence and economic policy.
Context ∞ In the context of digital assets, bank supervision is increasingly scrutinized as traditional financial institutions explore crypto integration. Regulators are grappling with how to apply existing supervisory frameworks to banks engaging with cryptocurrencies, stablecoins, and blockchain technology. Key discussions involve capital requirements for crypto holdings, anti-money laundering controls for digital asset transactions, and the potential systemic risks introduced by these new financial activities.