the event of stress. this approach recognises the integrated nature of many international groups. it recognises that having a clear agreed resolution strategy, combined with committed cooperation including in - depth sharing of information between the home and host supervisor, is key to understanding the risks that are shared by the parent and subsidiaries of large, complex groups. but it also seeks to ensure that the potential risks of a disorderly resolution are mitigated. in summary there are a number of key components to committed cooperation. a. a credible resolution strategy and equivalence of the home resolution regime, supported by internal tlac. bis central bankers ’ speeches b. a high degree of commercial, operational, and financial entanglement between subsidiary and parent. c. transparency over the financial position of the parent group, its capacity to support the subsidiary, and the equivalence of the home supervisory regime. d. transparency over the intervention framework, including host and home discretion and triggers for action. if we can move to a position where sufficient and appropriately committed loss absorbing capacity is in place on a global basis in order for these groups to deliver outcomes for both home and host supervisors, then we will be better able to realise the benefits of international banking – and to do so safely. in conclusion, international banking benefits the global economy. however it carries risks. and because of their cross - border nature, international banks are inherently harder to supervise due to the risk of duplication and gaps. there is in addition a danger of international banks being supervised sub - optimally in a balkanised manner. as the largest host supervisor globally by many measures, the uk is more exposed to these risks than most. in my view the best approach to try to tame these risks is to act globally, through committed cooperation between home and host supervisors. we can get to the point where we are not in fear of international banking, and that the risks that it brings are appropriately managed – just like a lion tamer controlling their lions – and under control. as host supervisors we are committed to playing our part in global consolidated supervision and resolution of international banks. this supports international banking and flows of capital – and supports a strategy of being “ open for business ” as long as it is safe. bis central bankers ’ speeches

s low trend of inflation. for let us make no mistake : a resurgence of inflation would undermine our chances of a durable economic expansion. of course, the challenge for monetary policy is to assess carefully just when action is needed. ideally, we would want our economy to operate at a level that is as close to full production capacity as possible. at this level, inflation will stay low and stable, and the economy can expand at as rapid a pace as is sustainable over time. it is when persistently strong demand pushes the economy to operate well above capacity over a period of time that inflation pressures develop. this is what monetary policy must seek to avoid. unfortunately, in practice, it is very difficult to estimate exactly where that sustainable operating level for the economy is. and this is even harder after a period of major restructuring, such as we have experienced in canada in the 1990s. while conventional measures suggest that the economy may now be operating at capacity, it is quite likely that structural changes have raised the output potential of our economy. but we are not sure by how much. that is why the bank closely monitors a wide range of indicators that can help it assess the extent of current and future pressures on capacity and inflation. some of the elements going into this assessment are : unexpected movements in actual inflation ; changes in expectations of future inflation ; other measures of pressures in product and labour markets ; the growth of money and credit ; and information gathered by our regional representatives from business contacts across canada. because of the current strong momentum of demand and high levels of economic activity, and because of the uncertainty about canada ’ s production potential, the bank must continue to be on guard. it must continue to watch for leading signs of future price and cost pressures and stand ready to respond promptly if such signs emerge. to conclude, the bank of canada has taken a number of steps to become more open, transparent, and accountable about the conduct of monetary policy. through a regular flow of reports and speeches like this, we intend to continue telling you where the economy is and where we think it is going, what risks we see out there, and what monetary policy can do to reduce them. these days, the bank is sensitive to the increased risks of inflation coming from a more synchronized expansion of the world ’ s major economies. not only does a buoyant us economy continue to bolster the demand for canadian products, but firmer commodity prices are boosting our national income and adding to the impetus of domestic spending in canada.