the basel committee and fsb standards. in developing the orderly liquidation authority established by title ii of the dodd - frank act, the fdic has recently expressed a preference for resolving a failed sifi under a single receivership and internal recapitalization model. under this model, the parent company of the failed sifi is placed into receivership ; all, or substantially all, of the assets of the parent company are transferred to a bridge entity ; the parent company and its residual assets are liquidated ; and the bridge entity is capitalized, in part, by converting the holders of long - term unsecured debt of the parent company into equity holders in the bridge. under the single receivership model, the major subsidiaries of the sifi continue to operate as going concerns. this approach holds great promise, but ensuring its viability as a resolution option requires, among other things, that each sifi maintain an amount of long - term unsecured debt that is sufficient to absorb very significant losses at the firm. some other jurisdictions have, or are planning to, put in place special resolution mechanisms that conform to the emerging international standards. but even continued progress along this path may not solve all the possible problems associated with failure of a sifi. the coexistence of internationally active firms with nationally based insolvency regimes means that there could be important cross - border legal complications when a home jurisdiction places into receivership a firm with significant assets, subsidiaries, and contractual arrangements in other countries. a comprehensive, treaty - like instrument for a global bank resolution regime to address these issues is surely an unrealistic prospect for the foreseeable future. the federal reserve and the fdic are working together with counterparts from other countries to identify opportunities for more limited cooperation agreements, coordinated supervisory work on resolution plans, and other devices to make the orderly resolution of a large, internationally active firm more feasible. otc derivatives regulatory reforms another key part of the dodd - frank act that involves significant international considerations is otc derivatives reform. in the united states, administrative agencies are implementing the requirements of the dodd - frank act to strengthen the infrastructure and regulation of the otc derivatives market. this task includes enhancing the role of central counterparties, which can be an important tool for managing counterparty credit risk in the derivatives market ; improving regulation and supervision of dealers and key market participants ; introducing minimum margin requirements for certain derivatives transactions that are not cleared with a central counterparty ; and increasing transparency. a roughly parallel

in wholesale and investment banking, a concentration process in under way - even on a european base43 - retail banking seems to be still confined to the national level. this could be partly attributed to the lack of unified payment and settlement systems and to prevailing differences in the legal and financial environment. 44 on the other hand, there was a real surge in takeover activities in the banking sector in 1999. record values of mergers and acquisitions amounted to 149 billion euros last year and outnumbered m & a activites in the united states nearly twice over. 45 nevertheless, consolidation in the financial sector was mainly limited to the domestic scene. this might be due to the exploitation of cost reductions by trimming overlapping branch networks and excess capacity within a country and due to the gain in reputation largely confined within national borders. 46 however, mergers tend to cut operating costs and reduce managerial inefficiencies and therefore might contribute to an increase in competition. 47 by improving price transparency in financial services, the euro could further enhance competition among financial institutions. in fact, banks ’ interest rate margins, i. e. the difference between interest rate received and paid in terms of the balance sheet volume have declined in germany to 1. 28 % in 1999 which marks a historical low. 48 concerning non - interest income, fees paid per unit by private bond issuers for intermediation services declined in 1999. 49 this reduction in revenues may very well reflect increased competition within the market. moreover competition owing to price transparency has been driven considerably by advances in information and communication technology such as electronic banking. the narrowing of interest margins and substitution effects on the liability side of see ecb ( 1999a ), p 21. exceptions are luxembourg and ireland with foreign market shares of over 50 %. see, eg de bandt, o and e p davis ( 2000 ), p 1063. see ecb ( 1999a ), p 1. see hurst, c, e peree and m fischbach ( 1999 ), p 85 ; bis ( 2000a ), p 131, and mccauley, r n and w r white ( 1997 ), p 22. see santillan, m bayle and c thygesen ( 2000 ), p 51, and casu, b and p molyneux ( 2000 ), p 370. see cechetti, s g ( 1999 ), p 4. see ecb ( 2000 ), table 4. however, one should keep in mind that the consolidation process