industries in major countries, are not subject to legislation requiring consolidated supervision. some have banking subsidiaries in the uk, owned by companies established under article xii of the new york state banking act. accordingly these companies and their uk subsidiaries are subject to consolidated supervision by the new york state banking department. the involvement of a home country supervisor in this way gives us a degree of comfort which allows the ring - fencing to be less stringent than it would otherwise be. however this clearly falls a long way short of comprehensive consolidated supervision of the entire investment banking group. there is a lively debate in the us at the moment about the most appropriate regulatory structure for all financial institutions, and particularly for investment banks. this tends to be regarded in the us largely as an internal matter. but the fact that the large us financial institutions have a global reach inevitably makes that debate a matter of great interest and concern to the international financial community. we are optimistic that legislation will soon be enacted to address these concerns. it would certainly be disappointing if it is not. conclusions though i have attempted this morning to identify some features of regulation on which we might well agree, i doubt whether there is such a thing as an ‘ optimal ’ regulatory structure. each country has its own legacy of supervisory structures and approaches. but an appropriate international structure is one which works as seamlessly as possible and has clear lines of responsibility ( at least, that is what we expect from international banking groups ’ controls ). one co - ordinating regulator for each institution could play a crucial role in such a structure. the question of the number of regulators is, in my view, less important ; no one has yet suggested we set up one body world - wide to carry out all supervision, so whatever our own vision of an optimal regulatory structure, it will have at its centre a requirement for supervisors from different disciplines and in different countries to communicate effectively with one another. this weekend ’ s conference is a good opportunity to do that.

the banking and financial services acts were put on the statute book. it is therefore not surprising that over there, as well as over here, there is criticism of the existing structure, and pressure for change. our own system, with its monopolistic approach to the origination of legislation, does not generate competing draft bills. but the marketplace for ideas on regulatory reform is, i can assure you, just as well contested. critics of the existing british system object on three counts : that the failures of the last decade demonstrate its inability to cope with strains and crises ; that it is unnecessarily complex, with overlapping and sometimes even conflicting responsibilities ; and that it has failed to keep pace with changes in institutional and market structures ; the distinctions on which it was based no longer effectively apply. it is not my aim today to give a comprehensive assessment of the validity of all these arguments. and, in any event, just as in the us, there is a heavy political dimension to this debate. but i would make a few observations on the arguments advanced for change. the uk system is complex, although it is no more complicated than the equivalent arrangements in some other countries with similarly sophisticated financial markets. ( indeed, were i not a guest here, i might say that the us system was rather more labyrinthine than ours. ) those who argue for simplification point to duplication of function and cost, especially between the sib and the front - line financial services regulators. there is undoubtedly a case to answer in that area, as both the sib and the sros would acknowledge. but the legislation we have explicitly dictates a two - tier structure. it is also true that institutions now tend to be involved in a variety of different businesses. banks own securities houses, fund managers, and insurance companies. insurance companies are diversifying into banking, and so on. so that even though there should always be a lead regulator, looking at the overall position of the business, institutions still face the costs of complying with the requirements of several regulators. but the question underlying these arguments about complexity and overlap is more fundamental. should regulation be based around institutions ( it is institutions which fail, after all ) or around functions or types of business which call for specialist regulatory knowledge? the uk system is organised neither along wholly functional nor wholly institutional lines. in today ’ s markets, where firms are a mass of subsidiaries and business units, no major market participant deals with a single regulator across all its businesses