company or holdco where they are absorbed following the creditor hierarchy, capital first and then debt. • my third example of issues that will be addressed through resolution planning is foreign law debt. we cannot count as mrel or tlac instruments where the statutory powers of the resolution authority to bail them in are uncertain. brrd is explicit on this requiring, under article 55, all third country unsecured liabilities to carry contractural terms that provide for bail - in. most existing debt instruments do not. as part of the resolution planning process, we will ensure that they do and that our statutory powers in resolution are enforceable. these examples illustrate the basic idea that there is much to be done through the resolution planning process to make existing liability structures compatible with resolution. this won ’ t be a matter of grandfathering. indeed even if a particular liability meets the definition of mrel, on the face of the directive it does not mean it does not represent a barrier to resolvability. as resolution authorities we will address these barriers as part of our resolution planning work and find ways to remove them. or else we will adjust mrel requirements for bis central bankers ’ speeches firms. in the fsb proposal this is the placeholder for a pillar 2 element alongside the pillar 1 minimum requirements set out in the term sheet. my third theme is why then a standard – if we are going to be preparing resolution plans and setting mrel for individual firms why have a standard at all? there is an obvious level playing field consideration, especially among the g - sibs that compete with each other and operate internationally. but there is a deeper reason that goes to making resolution – and indeed international banking – work. the resolution naysayers point to the events of the crisis and the lehman failure in particular and say that cross - border resolution will never work, national interest will always win out. clearly the whole enterprise of resolution planning is to face up to this challenge ex ante. the key attributes envisaged cooperation agreements ( coags ) among the authorities to describe a common resolution plan for an individual g - sib. but to work coags need underpinning and this is where tlac comes in. not only does tlac provide countries with confidence that g - sibs are operating with sufficient resources to be resolved safely. but that confidence is provided in a concrete form. this is the internal tlac downstreamed in spe groups from the parent entity to material subsidiaries

elements. this approach allows the participants to exploit potential business opportunities while fulfilling certain social responsibilities. 6. cross - border exchange and cooperation are imperative. apart from taking into full consideration the elements of time, place and people, we can benefit from observing the achievement of others in financial innovation. for products or services that are sophisticated or distinctive, we can study the concepts, repackage or adapt them for introduction to the local market. much can be gained and shared from getting to know other markets through cross - border exchange. through mutual understanding and interaction, we have better understanding of other markets and hence better knowledge. since the return to the motherland and the signing of the closer economic partnership agreement ( cepa ), economic ties between hong kong, macao and the mainland have much strengthened. there will be profound implications if trade transactions between these places can be settled in renminbi. this is a form of financial innovation which can only be materialized through cross - border cooperation involving not only the trading of commodities but also cooperation between the governments concerned. now, i would like to share with you another live experience. as we all know, since the return to the motherland, the macao sar government has been trying to turn macao into a service platform for the mainland and portuguesespeaking countries by capitalizing on the historical relationship that macao built up with the latter. financial cooperation between portuguese - speaking countries and msar has flourished from mere acquaintance. in september 2006, the bank of china ( macao branch ), bpi of portugal and its angolan subsidiary, bfa, signed a tri - partite cooperation agreement in the annual “ macao international trade & investment fair ” ( “ mif ” ). this agreement covers financial services including remittance made available to chinese enterprises and workers in angola. this appears to be a very simple cooperation arrangement. however, a closer look shows a few special features. traditionally, similar arrangements involve only two parties. now, this one involves one more party for a specific reason. the arrangement is not concluded for business between macao and angola or between macao and portugal. it is specially arranged for transactions between angola and the mainland. from this example, there is great potential for financial innovation in the area of cross - border cooperation. besides, we believe that much can be achieved between the pan - pearl delta region and its brother provinces and regions, between macao and the mainland, as well as between the mainland and portuguese - speaking countries