On 26 February, AFI’s Competition Enablers Knowledge Exchange (CKX) convened a technical session to examine a key policy question: how can financial regulators safeguard stability while also encouraging competition in banking?

“Promoting competition—often by allowing new and potentially riskier entrants—can seem at odds with prudential stability goals,” explained AFI Policy Expert, Anthea Paelo.  “This tension remains a central policy debate, particularly for AFI members navigating fast-changing financial markets.”

The session drew on insights from the 2025 Organisation for Economic Co-operation and Development publication, Balancing Prudential Regulation and Competition Considerations in Banking, presented by Beatriz Marques of the OECD’s Competition Division.

Among the main messages from Ms Marques’s presentation were that:

• Competition builds resilience: New FinTech and digital entrants reduce reliance on dominant firms and strengthen the system overall.
• Simplification & Proportionality: Matching capital and licensing requirements to an institution’s size and risk—such as under the United Kingdom’s “Strong and Simple” regime—supports both stability and market access.
• Align stability and competition objectives: Calibrated frameworks and modern resolution tools enable orderly market exit, encouraging entry while limiting systemic disruption.
• Cooperation: Institutional coordination between regulatory and competition authorities, backed by tools like sandboxes and competition assessments, enables coherent policymaking in digital markets.

“Regulatory design can shape market structure,” Ms Marques noted. “If we strike the right balance, digital transformation can deliver innovation and inclusion alongside resilience and competitive dynamism.”

The session formed part of a broader CKX dialogue series that brings together subject-matter experts and AFI members to share knowledge, examine emerging policy challenges, and strengthen peer learning on competition-related issues across jurisdictions.