If clearing houses are not themselves to become a new manifestation of the too-big-to-fail problem, clearing house risk management will need to be transformed. For example, the setting of margin to cover risks to the clearing house relies on real-time information on aggregate exposures to counterparties and products. Common standards for data, LEIs and PIs, make that a more realistic prospect. A fourth dimension of the reform agenda is to make the resolution of the world’s largest financial firms easier and speedier. The resolution of complex firms is rarely either. Reconciling competing claims on Lehman Brothers’ asset pool has already taken insolvency practitioners three and a half years and thousands of man hours. It will take many more years before it is complete. Homogenised information systems, which can be aggregated across business line and counterparty, could transform this resolution process. This relies on effective and timely information systems on the key counterparties and the key risk exposures. Counterparty traceability, like counterfeit drug traceability, is central to containing the panic once failure occurs. For both, a common language is key. (c)  Mapping the network  The maps of the financial world being used and developed by regulators today broadly resemble those used and developed by cartographers in the 15th century. Large parts of the geographic globe were at that point uncharted territory, a source of fear and foreboding. Today, large parts of the financial globe are similarly uncharted or cast in shadows. They too are a source of regulatory fear and foreboding.

Big suppliers viewed them as unreliable given the costs and difficulty of small suppliers executing real-time inventory management. Only large firms with big IT budgets could afford the sunk costs of such systems. Today, a real-time inventory management system can be built using GS1 standards for a few thousand dollars. Small firms can connect to global product webs, through nodes such as Wal-Mart’s central inventory system, in the same way they might connect to a Facebook friend. A common language has levelled the playing field between the corner shop and the supermarket. The transformative powers of a common language have been even more striking in such well-established industries as publishing, music, advertising, news and retailing. For decades, large incumbent firms dominated these markets – EMI, Borders, Tower Records. Yet in less than a decade, new entrants with new business processes have completely reshaped the industrial landscape. Take publishing. Until 2007, publishing was an industry essentially unaltered since Gutenberg. The printing presses, while bigger and faster, would have been recognisable to a fifteenth century printer. 18  Vise and Malseed (2005). 19  McLaren and Shanbhogue (2011), Choi and Varian (2011). 20  Jorgenson et al (2010). BIS central bankers’ speeches  7  Copying and distributing a book to the public involved a complex chain of printers, wholesalers and retailers. This lengthy supply chain added both risk and cost. It also created a significant barrier to entry for new authors who were reliant on publishers to get their physical books onto physical shelves.