place. it is not clear that any country has done much better than the others despite the differences in regulatory structure. perhaps canada has the best claim and that has a system similar in many respects to the uk ’ s. whatever the boundaries, in a crisis like today ’ s i am sure that cooperation between the regulator, central bank, and finance ministry would be essential. i am pleased therefore that the new legislation makes clear the duty of the bank to cooperate with the fsa and treasury. lesson 3 : tighten international coordination if the tripartite arrangements at home needed to be improved, cross border coordination needs to be transformed if we are to avoid a drift back into a network of national and regional financial enclaves. the failure of lehmans was a fully fledged disaster for the world economy. and a number of other cases, from the failure of the icelandic banks to fortis, dexia and ikb, have shown how difficult it is to manage failures of international banks. yet the fact is that most of the key players in the world ’ s financial markets have developed into large and complex multinational firms. their business is not separated into national units. some core functions – such as risk - management and liquidity management – will be centralised, and performed at the head - office. activity at each hub cannot be viewed in isolation : a multinational may raise deposits in one country to fund loans in another. and the ultimate buffer against unexpected losses – capital – is fluid across borders in pursuit of profit. one response is to call for global regulators to deal with global institutions. that of course means pooling national sovereignty over a key issue of economic policy. and it could also require a global fiscal authority with deep pockets to whom the regulator could turn should one of these institutions fall into distress. the task of persuading the us and china to hand over the regulation of their largest banks to a supranational regulator would make even the greatest diplomat quail. another conclusion is that such multinationals pose too great a risk to stability and should be subject to greater control by host authorities in each jurisdiction with the creation of separate pools of capital and liquidity in each country. but that retreat from globalisation would also have a cost in inefficiency and restraints on the flows of capital between countries. we should not forget that the last decade of free financial markets has been a time of great progress across the developing world in asia, eastern europe and south america. but the process of building up national

making banks resolvable : the key to making resolution work speech given by andrew gracie, executive director, resolution directorate risk minds conference, amsterdam 4 december 2017 all speeches are available online at www. bankofengland. co. uk / speeches introduction resolution has come a long way since g20 leaders put together the post - crisis financial reform agenda in summits in london and pittsburgh in 2009. in some ways, it represented the most notable gap, and significant change in the pre - crisis regulatory architecture. nearly ten years on, huge progress has been made in establishing effective resolution arrangements and the commitment to ending too - big - to - fail ( tbtf ) is undimmed. the immediate priority in this effort was to put in place the necessary legal frameworks. agreement in 2011 of financial stability board ( fsb ) key attributes for effective resolution regimes provided the international standards to ensure a consistent approach to the design of resolution regimes across g20 jurisdictions. the uk now has in place a comprehensive bank resolution regime that is compliant with international standards and will remain so after brexit. similarly, for all advanced economies, there are now resolution regimes that are largely compliant with the key attributes in all the jurisdictions that are home to global systemically important banks ( g - sibs ). but the key attributes were about effective resolution regimes rather than resolvable firms – they defined a tool - kit but not how to use it ; and a process for resolution planning for g - sibs but not what would make a firm resolvable. powers without resolvability leaves resolution authorities vulnerable. indeed, the moral for me of recent failures and near - failures is not that resolution is misguided and will not work, but that it will not work if firms are not regulated and supervised in a way that makes them resolvable. this is the story of the last five years. we have focussed on organising firms in such a way that authorities ’ resolution powers can be used without significant adverse consequences for the rest of the financial system or the wider economy. this moves us progressively to where we want to be against risk appetite. and though we are not yet where we finally need to be, what has been done has already yielded significant benefits. for example rating agencies have largely removed government support uplifts to bank ’ credit ratings. where uk firms have come under stress, our resolution arrangements have been one factor that has helped secure recovery. today i want to review where we are on the journey