So have the inputs, the thousands of air-miles and hours spent in meeting rooms and the outputs, the new global standards and rules, secured the outcome – a safer global financial system? This is the final question I will turn to. The inputs and the output have achieved more internationally than ever before. They are necessary conditions for success. But they are not in and of themselves sufficient. To achieve success, to make the international financial sector truly safe, this programme of reform needs to meet two further conditions. The first, and, wild difficult, the easier of the two, is the condition of coherence. The second, and harder, is the condition of mutual trust. I am often reminded by financial sector firms of the need for “coherence”. “How do all these reforms fit together?” “Given the interconnectedness of all things in the financial sector what about unintended consequences?” And, most pointedly, “when will this regulatory tsunami end?” I have sympathy for these concerns. Financial firms need to be able to plan. They do not have unlimited resources. They need to know as soon as possible the regulatory end point they are working towards. And it is true that some of the regulatory reforms overlap. Some address the same issue from different angles. We cannot be sure how they will work together in practice. But remember, neither was the crisis “coherent”. It threw up multiple and complex failures and problems that then sparked multiple regulatory responses.
These, and a willingness to put the spotlight on those that do not comply, are a cornerstone of the mutual trust we require. The FSB has also already begun to play a role in helping jurisdictions that have implemented standards in different ways come to a shared view on mutual recognition. The key is agreeing to focus on the outcomes achieved in different jurisdictions rather than a line by line comparison of respective rulebooks. The FSB will need to be increasingly active in this area as the implementation of the international reform programme progresses. The IMF has a key role to play through its Financial Stability Action Programmes for individual countries and its Spillover Reports on how, within the global financial system, actions and developments in one jurisdiction can affect others. And for the thorniest issue of all – resolving global systemically important banks and ensuring they are international in death as well as life, mutual trust has to be built on common standards and rules to ensure banks have debt that can be safely bailed-in in the right amount and location. To return to where I started: If we don’t hang together most assuredly, one way or another, we will hang separately. Since that first G20 leaders’ summit in November 2008 we have made much greater progress than ever before on agreeing and implementing international financial regulatory reforms. We can break the back of that work at the G20 in Brisbane this November.