for further cooperation. however, some cross - border matters are still unresolved and urgently need to be addressed. major differences between the us and eu regulations can be found, for instance, in the methods used to compute the initial margin coverage of ccps. and they can also be found in the scope of reporting requirements to trade repositories. let us take a brief look at these two examples. first, the rules used for calculating the minimum initial margins of ccps differ between the us and the eu. generally speaking, ccps ask for initial margins in order to hedge the market risk of a derivatives position during the liquidation period in case a clearing member defaults. under the existing eu and us regulation, risk managers at ccps have to take into account different minimum liquidation periods and confidence intervals when calculating adequate initial margins. as a result, the initial margins requested by ccps may vary considerably, depending on the location of a ccp. this might eventually drive business bis central bankers ’ speeches towards those ccps with less strict initial margin calculation requirements. to prevent such regulatory arbitrage from happening, it might make sense to agree on consistent and strict international standards in detail and thus reduce national leeway. second, the mandatory reporting rules differ significantly in terms of timing and scope. in the us, only cftc - registered “ swap dealers ” and “ major swap participants ” are required to report their transactions to trade repositories in real time. in the eu, meanwhile, transactions have to be reported by the end of the next business day by both contracting parties. furthermore, exchange traded derivatives, market prices and collateral levels have to be reported in the eu, but not in the us. it remains to be seen whether these differing reporting rules can be recognised as being equivalent. and – more importantly – it also remains to be seen how a meaningful and accurate global aggregation of trade repository data can be brought about. laying the groundwork – cooperation and harmonisation ladies and gentlemen, i have briefly discussed the too - big - to - fail problem, the shadow banking system and the market for otc derivatives. each of these issues highlights the need for international cooperation. if we do not coordinate our approaches towards regulation we will create a fragmented financial system. a financial system with vast opportunities for regulatory arbitrage and ample sources of systemic risk. against this backdrop, recent regulatory initiatives in the us worry me. they seem to contradict the need for international cooperation. a “ balkanisation

andreas dombret : regulatory reform – unresolved issues and the need for international cooperation speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the harvard law school symposium on “ building the financial system of the 21st century – an agenda for europe and the united states ”, armonk, new york, 28 march 2014. * * * introduction ladies and gentlemen thank you for the opportunity to speak today at the harvard law school symposium on building the financial system of the 21st century – an agenda for europe and the united states. it is a great pleasure to be here. in november 2008, just a few weeks after lehman brothers failed, the leaders of the g20 met in washington d. c. in their meeting they took far - reaching decisions – not only to combat the current crisis but also to prevent future crises. a central passage of their declaration was as follows : “ we pledge to strengthen our regulatory regimes, prudential oversight, and risk management, and ensure that all financial markets, products and participants are regulated or subject to oversight, as appropriate to their circumstances. ” today, more than five years later, we have made good progress. nevertheless, we must be aware of what mark roe from harvard university calls the “ regulatory confidence cycle ”. he writes : “ regulators react to an explosion by creating new rules. the economy recovers ; the regulators conclude that they did their job well, and the regulated then resist further tightening. [ … ] as the recovery continues and the memory of the financial crisis grows faint, the appetite for regulatory change dissipates. why fix something that is no longer broken? ”. on a superficial level it appears that the financial system has been mended. however, we have to ensure that it will not break again – and this is an objective we have not yet achieved. there are still issues we need to address in order to create a stable financial system. in my speech today, i would like to highlight three of these issues : the too - big - to - fail problem which has already been discussed this morning, the shadow banking system, and the market for otc derivatives. let us begin with the too - big - to - fail problem. taming the beast – the too - big - to - fail problem leaving aside all the nitty gritty, there is one thing we have to do to resolve the too - big - to - fail problem : we need to introduce more