discussed in the context of ttip. what we need is a reliable legal framework, something that all developed economies can already guarantee. if we want to do business in a society or deliver goods or services to its markets, we have to accept the rules this society deems essential, in which case a company ’ s cost - benefit analysis will show either that compliance with said rules will still deliver an acceptable return, or that it should not engage in the business in question. 5. how much harmonisation in global finance? let ’ s turn to my second example : global finance and regulatory harmonisation. here, focused harmonisation and more diversity could also be applied. this statement may surprise some of you, as the basel committee on banking supervision has just finalised the basel iii agreement after eight years of global cooperation to devise the complex set of rules. and of course i would not wish to see this wheel turned back. basel iii is an important milestone ; it is a global minimum standard that imposes limits on the risks that internationally active banks can take. by defining minimum amounts of equity for banks in relation to their risk - weighted assets, it seeks to reduce the international risks to financial stability. the basel committee on banking supervision, a transnational body of supervisory authorities from 28 jurisdictions, has worked since the onset of the financial crisis to provide a global solution to problems that brought about the financial crisis. and i am a strong supporter of implementing this standard in the european union to make it a binding reality. i am convinced that the ukauthorities will take a very similar view. however, please note two qualifications : these are minimum standards for internationally active banks. 11 since basel standards are minimum standards, a country may decide to set stricter requirements. for example, switzerland has a higher leverage ratio. and as many of you know, the uk has ring - fencing rules in place that separate vital basic functions of a bank from the riskier ones. this policy is not of the basel committee ’ s making, and the uk is free to apply it in its jurisdiction. the second qualification of the basel iii standard is that it is for internationally active banks. as such, jurisdictions are free to apply a different set of rules to smaller, only nationally active banks that pose no threat to international financial stability. most nations already have less restrictive rules on smaller banks in order to reduce the operational burden for them. i am a strong proponent of extending this proportionality further, because the highly complex regulatory reforms

is free to apply it in its jurisdiction. the second qualification of the basel iii standard is that it is for internationally active banks. as a result, jurisdictions are free to apply a different set of rules to smaller, only nationally active banks that pose no threat to international financial stability. the majority of countries already have less restrictive rules in place for smaller banks in order to reduce the operational burden imposed on them. i am a strong proponent of extending this proportionality further, because the highly complex regulatory reforms introduced in the wake of the financial crisis were intended for global banks and overburden smaller, regional banks. in sum, then, we ought to focus on truly global aspects, like regulating globally active banks, while leaving it to individual countries to carry out those tasks that they are better placed to take care of, such as regulating locally active banks. 4 the challenge of supervisory cooperation the second area in which we will see a re - balancing of global cooperation is supervisory cooperation. here, like with regulation, we should reassess where a global approach is sensible, and in which cases national approaches are better suited. as a result, we are likely to see more divergence in some areas, but hopefully some more cooperation in other areas. an example for more divergence is likely to be higher demands for licensing foreign bank branches and subsidiaries. take, for example, the discussion about introducing an eu intermediate holding company, or ihc for short, equivalent regime. the european union has been debating a draft law proposing the establishment of what are referred to as intermediate parent undertakings, or ipus for short : similar to the us ihcs, foreign banks would have to bring their eu operations under a single holding company. this will most likely become law ; and for good reason, because we need to have a better, consolidated understanding of what is going on in international banks doing business in europe. what ’ s more, we need to be able to act reliably in times of turmoil. otherwise, we would not be able to fulfil our mandate of ensuring financial stability. but to be clear, this instrument is by no means intended to make market entry more difficult for foreign banks – and the bundesbank will continue to advocate fair access for foreign banks. as a result, we will move further away from the idea of serving the world from one spot with the need for only one licence. this is frustrating in a way, but it ’ s a realistic approach. this must, however,