‘ good luck ’ story may have reflected the benign effects of globalisation. this realisation has dawned as it has become clear that globalisation is having pervasive effects on our economies, as well as contributing to some trends which are not so immediately favourable. globalisation, in the present context, is shorthand for the increasing integration of international markets for goods and services, capital and labour. as we all know from first hand experience, the world economy is being transformed by the lowering of all sorts of barriers to the free movement of people, money, knowledge, goods and services. these trends are, of course, as old as human history. but there have been periods, like the second half of the nineteenth century, when globalisation has proceeded rapidly and periods, like the first half of the twentieth century, when it has gone into retreat. the past fifteen years or so have been a period of major advance as a result of far - reaching political and regulatory changes as well as revolutions in technology and communications. the pace of change has been striking in several key areas. first, international capital flows have grown explosively, as financial markets have become more integrated. as a result, the value of the global stock of assets in cross - border ownership tripled over the ten years to 2004. as well as increasing the scope for mobilising savings and allocating capital across different markets, the development of deep and liquid international financial markets has opened up new possibilities for diversifying risks and smoothing the adjustment to unforeseen events. this should promote both economic stability as well as growth. second, the sheer scale and pace of economic development in china is without precedent. what is not new is its strong export orientation – this was the route taken by japan and the east asian tiger economies. china is now a key part of both global and regional supply chains for the production of low - cost manufactured goods. china now produces 80 % of the world ’ s photocopiers, 50 % of the world ’ s textiles and 50 % of the world ’ s computers. these developments will tap the labour of hundreds of millions of people who were previously effectively outside the global market place. they are also triggering urbanisation – and infrastructure investment – on a scale, and at a rate, which makes our own industrial revolution look sedate, even puny. the chinese government expects 300 million people to migrate from the countryside to urban areas over the next 20 years. china had no motorways in 1988, now

easier to put into practice when you are working with someone like mike gill, who wants to get things done and is at heart an internationalist. and, so it should be no surprise that during the period mike was here at the cftc, things did get done, and they continue to get done building on his legacy. there is another feature of clearing that is distinctive. as i said earlier, by its very nature it concentrates the risks associated with the trades being cleared. that's how and why ccps are such crucial nodes in the financial system. but it also means that if a ccp doesn't manage its risk well, the concentration magnifies the impact of the problem. moreover, ccps tend to be highly interconnected because the instruments they clear are likewise interconnected – think about the different ways to trade interest rate risk. a small number of ccps provide most of the capacity in over the counter derivatives clearing. and, a small number of clearing members provide the majority of clearing services to clients at all of these big ccps. these firms are also providing key services to the ccps, such as settlement, custody and liquidity backstops. we can take a few points from this. clearing is quite complicated and technical as an activity. i'm going to stick my neck out and suggest that here in washington, conversations in bars are not of the sort : " tell me how does margining in a clearing house work ". its notoriously a dry subject, but important, hugely so. but therein lies a risk – even at international meetings there can seem to be other things to talk about, happily so, and that can lead to problems of neglect. except, onto the scene came mike gill and chris giancarlo. the enthusiasts had arrived. suddenly, it seemed a pleasure to talk about clearing. the fun kids talked about clearing. the serious point is that supervising big ccps requires deep cooperation between authorities across multiple jurisdictions. it requires cooperation not fragmentation. we knew how to do that, but it always seemed harder to put in practice than it should have done. we don't like economic fragmentation in the world, rightly so, but somehow arguments are made that its ok to do so for clearing. no it isn't as a matter of fact, because such a view defies the logic of how financial markets work. supervising and regulatory cooperation is a key part of the right approach. i want to finish by looking forwards