Many jurisdictions have in place statutory regimes to allow the resolution of failing banks. But until now, the potential use of those regimes on systemic and cross-border institutions has been in doubt. G20 Leaders endorsed two proposals that will allow global systemically-important banks to be resolved when they fail, without the need for taxpayer support and without disruption to the wider financial system or real economy. The first is an agreement, catalysed by the FSB, between ISDA and an initial group of 18 global derivatives dealers. This new Protocol prevents derivative contracts being terminated disruptively in the event of a bank entering resolution. It is a crucial step to closing off the risk that foreign counterparties take their money and run. Most jurisdictions already have legislation that achieves this nationally, but for global banks national solutions aren’t sufficient. This new agreement fills the gap by extending the  weights have stabilised and the increase in leverage has been unwound. The Bank of England’s proposals are set out in Bank of England Financial Policy Committee (2014c). 5  4  Much of this has been driven by the FSB and the joint public-private Enhanced Disclosure Task Force. Across the major jurisdictions, the recommendations of the taskforce are more than half way towards full implementation. Banks in the UK have implemented 95% of the recommendations. The latest progress report is in Banziger et al (2014). BIS central bankers’ speeches  approach across borders.
It is clear that the aim of central banks to make monetary policy less exciting and more boring needs to be complemented by a collective effort to bring boredom to the international monetary stage. 1  Over the past year, senior policymakers from within the G-7 are reported to have claimed that “It’s awfully important that the euro zone adopt policies that will allow them to grow faster. Their slow growth is hurting our growth” (John Snow, AFX news 24/03/04), and that “Our American friends need to put in place a determined policy to control their deficits and so that their currency does not distort commercial trade” (Nicolas Sarkozy, AFX news 25/11/04), or indeed that China’s exchange rate policy “has become a destabilizing force in the world economy, has led to major international exchange rate and trade imbalances throughout the world” (Open letter from US senators Schumer, Bunning, Durbin, Graham, Dodd and Bayh to Vice President Richard Cheney, 22/01/04). 2  BIS Review 9/2005