in turn have dramatic implications for e. g. funding costs. bis central bankers ’ speeches differences between the proposals of independent commission on banking and highlevel expert group “ the difference in the location of the ring - fence is important,... ” john vickers has made very insightful comments on the compatibility of the proposal of his group, the independent commission of banking with the proposal of the high - level expert group. i have a few comments on this theme : – icb and hleg proposals started from different directions ; the approach taken by icb started from the narrow banking philosophy, whereas hleg focused on the most volatile parts of banking business. however, the groups ended up with qualitatively similar proposals. – as john vickers has stated already, the main question as regards the position of the ring - fence is “ where should securities underwriting be ; in the investment bank ( such as in icb ) or in the deposit bank ( as in hleg )? ” another difference is that icb ’ s proposal includes geographical restrictions as non - eea customers cannot be served by the deposit bank. this highlights the focus on the viability of the uk banking sector in the icb. – hleg is based on the view that underwriting is closely connected with corporate banking and thus naturally belongs to the deposit bank. from the corporate client ’ s perspective, issuing a bond is an alternative way of financing to taking a bank loan. from the bank ’ s perspective, there are similar elements in both, because both involve a customer credit quality assessment, although in underwriting the bank ’ s own position taking is normally quite limited. – it is true that a promise of market making can be an important complement to a successful underwriting of a bond. however, separate entities within the bank group can well provide the underwriting and market making services without any additional cost to the customer. hleg did emphasise the importance that authorities require additional separation if that is needed to make the recovery and resolution plans credible, a measure that would bring the hleg separation proposal closer to the icb ring - fencing proposal. the proposals are also somewhat different with respect to the height of the ring - fence. the icb included restrictions on cross - ownership, for example. as suggested by the parliamentary commission of banking, tasked with the pre - legislative review of the bill, the ring - fence will now be “ electrified ” by giving authorities reserve powers to require full separation. “...

summary of an article entitled risk disclosure by financial institutions published in the bank of japan quarterly bulletin of february 1997 bank of japan, communication, 28 / 2 / 97. introduction public disclosure by financial institutions has long provided information about business performance through the publication of financial statements. in recent years, however, a number of financial institutions have come to focus on disclosure of a wider range of information, including their management policies. this is partly attributable to the expansion of derivatives transactions, which has made risk management techniques increasingly important in the management of financial institutions, and which has thereby encouraged financial institutions to improve such techniques. accordingly, individual financial institutions have been motivated to reveal voluntarily their risk exposures and risk management methods in order to win a favorable assessment from market participants. disclosure thus brings into play a check mechanism inherent in financial markets ( hereafter referred to as the market check mechanism ) that disciplines management of financial institutions, and thereby helps to enhance the efficiency and transparency of the markets and to stabilize the financial system. this report examines the disclosure of information on risks of financial institutions, with an overview of the current practices and future issues. it is intended to serve market participants, the beneficiaries of the information disclosed.