Upgrading international banking statistics to provide more detailed data on international exposures would enhance the ability of both supervisors and market participants to assess the vulnerability of domestic banking systems to financial shocks from abroad. It would also be useful to provide better information about the complex activities of the largest, internationally active banks, such as securitizations, credit risk modeling and credit derivatives.
The second foundation of market discipline is incentives. One promising direction might be to require at least the largest and most complex banks to issue minimum amounts of subordinated debt as a way of enhancing market discipline.