, there is a need to share information between the home and the host. this should be the least difficult, but in practice everyone who has tried to share information between authorities knows it can be a complicated and cumbersome process, at least until there is an established routine. even when there are no confidentiality concerns there are many practical obstacles to overcome. information sharing is not only about sending data back and forth, but more importantly, it is about explaining information and sharing assessments. as long as hosts are under the impression that they know a lot less than the home, it will be very tricky to cooperate. second, there is a need to cooperate on actions vis - a - vis the bank or the group and its components. if hosts cannot influence the process of supervision or crisis management, their trust in and use of the information from the home authority will be very limited. sharing information and cooperating on regulatory actions may be problematic already in normal times, but is probably much more difficult in a crisis situation when economic risks and costs are clearly visible. so far, cooperation and coordination in crisis situations is dealt with in the eu by various memoranda of understanding. even if these mous are not legally binding, they are valuable documents. they provide a basis from which more operational crisis cooperation agreements can be developed by the countries and authorities that see the need to do so. but looking at this increasingly complex patchwork of supervisory colleges, central bank networks and mous that we are now creating, one cannot help to wonder if there are not any better alternatives for cross - border cooperation. future alternatives to the home - host model what are, in the long term, the alternative models to the current home - host set - up? in the eu, we are committed to creating a single market for financial services. if we take off our national central bank and supervisor hats, are we really convinced that the home - host model is the best one in the long run? after all, several serious alternative models have been suggested. the pros and cons of the three main models are reviewed in an interesting paper by oosterloo and schoenmaker. 3 i will briefly comment on these. three alternatives for supervision the first alternative is to give the home supervisor the role of lead supervisor with full responsibility for eu operations, branches as well as subsidiaries. this is the proposal from the european financial services roundtable ( efr ). the lead supervisor would be the single point of contact for reporting

also responsible for supervising the entire group on a consolidated basis, while the host countries are responsible for their respective subsidiary banks and deposits. at this very moment, the cebs is drafting the so - called home - host paper giving guidance on how the home - host supervisory relationship should be arranged given existing eu legislation. even if there are no legally binding rules regarding the relationship between countries in crisis management or crisis resolution, these aspects of regulatory involvement have borrowed the terminology of the supervisory home - host concept. for example, when discussing lender of last resort in crisis management and burden sharing in crisis resolution we now talk about home and host central banks and finance ministries, respectively. this is natural, since legally the financial liabilities for a group are ultimately carried by the parent bank. of course, a parent can choose to default a subsidiary, but it will then have to bear the capital loss. subsequently, in practice, the ultimate public responsibility over a group rests with the home country. … comes under strain … at first glance, the home country principle seems very neat. but take a closer look and you will see signs that this set - up was not designed for a fully integrated market. essentially, there is a gap between, on the one hand, legal powers and mandates and, on the other hand, de facto abilities and responsibilities. home countries are given powers over branches and subsidiaries but might be unable or unwilling to use them, while host countries are losing powers that they have been willing to use. this gap becomes a problem once you have a banking group or bank that is systemically relevant in a host country ( see table 1 ). even if there are not so many of these cases yet, i am convinced that the number will increase. the potential conflicts of interest and coordination problems are of many kinds. let me give you some examples : table 1 : the home - host relationship ( both bank and group ) systemic host country relevance systemic relevance significant in home country in systemic relevance host country in non - significant significant potential conflict of and coordination problems interest not a big problem non - significant potential conflict of and coordination problems interest not a big problem … when branches and subsidiaries become systemically relevant suppose there is a banking group of roughly equal systemic relevance in the home country and the host country. the home country supervisor is the consolidating supervisor and coordinates the activities vis - a - vis the group. if cooperation works well, the host supervisor will receive information from the home supervisor. but in the event of