Andrew Gracie: Cyber in context Speech by Mr Andrew Gracie, Executive Director of Resolution of the Bank of England, at the UK Financial Services Cyber Security Summit, London, 2 July 2015. *  *  *  It is the prerogative of the keynote speaker to take an Olympian view. I am not sure what the gods on Olympus would have made of cyber. Indeed from the goings on in Greek mythology, it could well have been that they were cyber perpetrators rather than protectors. So perhaps it is fitting that there are hacks now like ZEUS that carry their names. But my Olympian view will try and put the work that we are doing as authorities and with the sector in context. The sector’s role is important. After all, it is the responsibility of firms first and foremost to ensure that they are resilient to cyber attack. From an authorities perspective, cyber is somewhat different, but it relates to the same underlying goals that drive our policy interventions elsewhere in relation to operational resilience. I want to describe this relationship before turning to the specific steps that we have taken in the UK over the last two years under the aegis of the Financial Policy Committee (FPC). Cyber is relevant to many of the functions of the Bank of England as a financial authority. We are responsible as prudential supervisor for the safety and soundness of banks, large investment firms, insurers and financial market infrastructure.
BIS central bankers’ speeches  3  Basel III implementation has been proceeding on a comparable basis in advanced and emerging market countries. The Financial Stability Board has been monitoring the unintended effects of reforms on EME banks and EMEs report no significant adverse effects. 4 However, potential differences in reform implementation across jurisdictions could create challenges, particularly in countries where foreign banks are active. This underscores the importance of continued home and host coordination. I would like to briefly touch on two U.S.-specific financial regulatory issues with international implications, namely enhanced prudential standards for foreign banks, including intermediate holding company requirements for the largest institutions, and issues surrounding correspondent banking, U.S. anti-money laundering rules, and “de-risking”. Of these, the latter may have the most relevance for the EMEs broadly. The adoption of enhanced prudential standards for foreign banking organizations (FBOs) is a key element of U.S. regulatory reforms, and a significant change in supervision of FBOs. 5 The largest FBOs (with U.S. non-branch assets greater than $ billion) must hold their U.S. subsidiaries under an intermediate holding company (IHC), and meet various capital, leverage, liquidity, stress testing, risk management and corporate governance requirements. These requirements respond to a mandate in the Dodd-Frank Act for enhanced standards for the largest domestic and foreign banks.