. the home state usually leads its prudential supervision. why does this geofinancial distinction matter? branches allow a more fluid movement of resources and diversification of risks within a group. but they also put the greatest reliance on the home supervisor and on cross - border co - operation. extending the logic of domestication retail deposit - taking is a critical economic function and local supervisors have more levers over subsidiaries than branches. therefore – consistent with the icb ’ s logic – we have preferred for several years that international banks from outside the eea ( known as ‘ third countries ’ ) with more than £100m of retail and sme fscs - covered transactional or instant access account balances put them in a subsidiary. there are not many of these : most international banks in retail focus on small expatriate or diaspora communities, or on particular niches in private banking. we expect each of these firms to have a viable and sustainable uk business model which accretes a portion of its own capital, rather than being reliant on its parent, with high standards of risk management and governance. see the pra annual report and accounts ; july 2017 and u. s. department of the treasury ; a financial system that creates economic opportunities ; june 2017. see ss10 / 14 : supervising international banks : the pra ’ s approach to branch supervision ; september 2014. all speeches are available online at www. bankofengland. co. uk / speeches embargo : not for release before 19 : 30 on wednesday 4 october 2017 these retail subsidiaries are not as insulated as the financial and operational separation required by the icb. but with a much lower threshold than the £25 billion of core deposits at which ring - fencing kicks in, our policy follows the same logic, proportionately applied. under passporting, currently we cannot apply our preference for retail subsidiaries to banks from elsewhere in the eea. it would be odd to continue with this if the uk and eu27 become third countries following brexit. subject to the negotiations, our current planning assumption is therefore that all international banks will need to put material retail business in a subsidiary. this should be no surprise given our existing policy – we are engaged on this with the handful of relevant branches and will continue to promote a smooth transition. how far does this logic go? overseas there are moves afoot to apply elements of this logic to other parts of financial services, in particular to wholesale banking. why

and earn returns and borrow at the same interest rates as do our brethren in the rest of the country. which raises an important question : if monetary policy is the same here as everywhere else in the united states, why does texas outperform the rest? the answer is no doubt complicated by the fact that we are blessed with a comparatively great amount of nature ’ s gifts, a high concentration of military installations and other “ unfair ” advantages. but one cannot avoid the conclusion that one of those “ unfair ” advantages is that we have a legislature, based here in austin, that under both democrat and republican governors has over time crafted laws and regulations that encourage business expansion and job creation. they have conducted the fiscal affairs of the state so as to maintain confidence in the future. one might draw two lessons here : first, that germany ’ s finance minister, wolfgang schauble, is right when he says, “ if you want more private demand, you have to take people ’ s angst away ” by having responsible and disciplined fiscal policy ; 4 and second, that fiscal policy either complements monetary policy or retards its effectiveness as a propellant for job creation. herein lies the tale of the recent long - term policy and strategy statement issued by the fomc at the conclusion of its meetings last week. the recent pronouncements of the fomc many of you may have read that the fomc did three things after its two - day meeting tuesday and wednesday a week ago. first, the committee issued the usual policy statement, stating that it “ currently anticipates that economic conditions … are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. ” 5 there are presently 17 participants in fomc meetings : the 12 federal reserve bank presidents and the five current governors. ten out of the 17 people get to vote in any given year, with the governors and the federal reserve bank of new york always having a vote. i voted last year, and you may recall that together with mr. [ charles ] plosser of the federal reserve bank of philadelphia and mr. [ narayana ] kocherlakota of the minneapolis fed, i resisted the notion of a need for a statement indicating that monetary accommodation be tied to a specific date, be it in mid - 2013, late 2014 or any other. instead, i feel that the key should be to calibrate monetary policy according to the state or condition of the economy