The ease with which firms can circumvent national borders and regulatory jurisdictions is a challenge of one dimension. If circumvention results in unsafe or unsound banking practices, it is a problem of another dimension. The problem may end up back BIS Review 87/1997  -5-  in the United States after all.
It is for these reasons that the Federal Reserve and the other U.S. banking agencies have been advocating that international agreements on banking supervision have a risk focus. For example, the Basle Committee on Supervision (under the Bank for International Settlements) recently agreed to embrace a portfolio-based, risk-sensitive approach to setting capital requirements for market risk.