the cost of their own actions and the risks they take. after much hard work, and extensive cross - border co - operation, the fsb is on track to agree proposals that, once implemented, will be decisive in achieving that. the use of statutory resolution powers to resolve global systemic banks will finally be possible. the proposals will be presented to the brisbane g20 leaders summit in november. that summit will be the watershed in ending too big to fail. the first is an internationally agreed standard on the total loss absorbing capacity ( or tlac ) that globally systemic banks must hold. it will be based on clear principles. but it will be much more than a list of aspirations. it will include a detailed indicative term sheet that will cover the amount ; the type, and the location of that loss absorbing capacity. it will establish a level playing field between global systemic banks, while taking into account differences in national resolution regimes. it will ensure globally systemic banks finally have the quantum of total loss absorbing capacity that extensive analysis show balances the benefit of greater resilience against the higher funding costs for the banks that results from the removal of public subsidies. it will set clear roles for home and host regulators in a resolution. it will give host nations the confidence that they won ’ t again be side - swiped by the failure of a large foreign bank. and, by removing the implicit subsidy that systemic banks have long enjoyed, it will reestablish market discipline. once implemented, it will make our financial systems more resilient and our economies stronger. the proposal will be subject to a rigorous consultation and quantitative impact study and market survey in 2015 and will take into account insights from the fsb ’ s ongoing resolvability assessment process for every systemic bank ’ s resolution plan. the tlac agreement will be complemented by another agreement just announced yesterday. this initiative of the private sector sets out the terms under which the 18 largest dealer banks, which represent 90 % of derivative activity, would stay cross - border derivative contracts temporarily when a global bank fails. this is a fundamental step to closing off the risk that foreign counterparties take their money and run. by agreeing to a short stay, cross border resolution becomes much more realistic and achievable. once this agreement is concluded, other market participants must be brought onto similar terms to those of the 18 big dealers, and fsb members must deliver on their commitments to establish regulatory requirements for contractual stays. there is more to do. resolution

identified a number of non - financial - stability risks that need to be addressed by the relevant regulatory bodies in line with its mandate to prevent regulatory underlaps and overlaps. all speeches are available online at www. bankofengland. co. uk / news / speeches and it is not just in the scanning of risks and responses to them that the post crisis reforms have left us in much better position. the stronger institutional framework, reporting to the highest political level, and the development of more granular and more comprehensive standards, provides much greater assurance for jurisdictions about the import and export of financial sector risks. that was the objective of the global leaders at the pittsburgh summit when they committed to developing and implementing global standards in a way that ensures a level playing field and avoids fragmentation of markets, protectionism, and regulatory arbitrage. and that is why, five years later, g20 leaders felt able to conclude that ‘ jurisdictions and regulators should be able to defer to each other when it is justified by the quality of their respective regulatory and enforcement regimes, based on similar outcomes, in a nondiscriminatory way. ’ we need to make sure we can sustain this especially in the face of new challenges. crisis concentrates minds. it is perhaps inevitable that as time passes and memories fade, there is less political focus on these issues and less will among jurisdictions to ensure governance keeps pace with the risks. fatigue sets in. for example : before the crisis basel ii, which was not particularly ambitious, took 10 years to agree. by contrast, post - crisis the key elements of basel iii, which was a significant step - change, took just 2 years. but as the crisis receded and fatigue developed, it took a further 5 years to finalise basel 3. 1, which implemented less sweeping changes. the lesson fades that in an integrated global economy we are all ultimately in the same boat or in the words of benjamin franklin that “ if we do not hang together we will most assuredly hang separately ”. this had led to fragmentation in the way we implement the reforms we have agreed. moreover, the circle of players has grown. the governance reform efforts of the last 50 years have been predominantly led by the advanced economies whose financial institutions dominated the global economy. that is changing with the increasing importance in the global economy of emerging markets – indeed much of the financial innovation we see today is happening in the emerging market and developing world rather than in the advanced economies. we are now in