one might argue that the global reach of major dutch and swiss institutions reflects this motivation, at least in part. importantly, one must ask if global institutions are more successful than their home - bound competitors. at least one private - sector study, from a major consulting firm, suggests that during the ten - year period ending 31 december 1996, most of the global financial services companies did not achieve significantly superior returns to shareholders. nor did they appear to achieve superior revenue growth. i am sure that there will be other studies that attempt to determine the effect of global consolidation on the financial results of the firms involved. in any event, regardless of the presence or absence of financial success, the trend toward a more global financial industry will continue. such market forces will provide a continuing impetus for continued cooperation and coordination among bank supervisors worldwide. indeed, the forces for cooperation will only grow as these trends become more pronounced. the gramm - leach - bliley act issues related to the international supervision and regulation of banks come at a time when we in the united states face new challenges in implementing financial reform and the provisions of the gramm - leach - bliley act. that act has the potential, and indeed the intention, to change substantially the structure, activities, and supervision of financial institutions in this country. many of the foreign banks represented here today operate as universal banks outside the united states and, like many us banks, you have been frustrated by the outmoded restrictions on your banking activities in our markets. after much debate, the us congress enacted legislation that permits banks operating in the united states to expand their activities within a legal and supervisory framework intended to preserve their safety and soundness. as you well know, the federal reserve board recently issued for public comment an interim amendment to regulation y setting forth the procedures for banking organizations to elect to become financial holding companies and avail themselves of the broader powers authorized under the act. in according financial holding company status to foreign banks, the congress instructed the board to apply capital and managerial standards comparable to those pertaining to us banking organizations, giving due regard to the principles of national treatment and equality of competitive opportunity. the rule applies the us bank risk - based capital standards of 6 % tier 1 capital and 10 % total capital to foreign banks wishing to become financial holding companies. it also applies the us leverage ratio to foreign banks, but at the lower holding company level of 3 %, instead of the 5 % ratio required of us banks. to consider differences in banking and accounting practices

complex and exotic structures. all approvals are reviewed & approved under specific transactional approval process by the derivatives approval & review team ( dart ) at sbp. i know that some people would like to see this fast tracked and we have taken steps to do so. though the specific transactions approved thus far are more complex and include variations of cross currency swaps ( ccs ), irs with embedded option, etc, the total volume in derivatives is still very low. in fx options the pak rupee equivalent is merely 177 million and fras 9. 650 million and so forth. the numbers are still very small despite having grown substantially. the point of going through these statistics is to highlight that there is a lot of work to be done in this area. in conclusion, i would like to say that pakistan has phenomenal opportunities in what has been going on globally in terms of private capital flows in terms of the savings that exist due to reserve accumulation in the region. secondly, we have to be proud of what we have achieved but at the same time we need to remember that there is still a lot more to be done. there are emerging trends of the nexus being developed between the capital markets and the banking sector and other segments of the non - banking sector. however, it is merely a small fraction. moreover, there are clearly lots of lessons that can be drawn from international and regional experiences of how we can foster these interlinkages and safeguard these effectively with the appropriate regulatory framework. i believe with us moving towards basel ii, while also positioning ourselves at the central bank with better supervision of the joint conglomerates, we should be able to offer these safeguards and oversee things more effectively. so i would like to encourage this forum to deliberate more on how we can go about nurturing this and what further steps are needed to promote innovation in the markets. thank you very much.