In this respect, you will have seen in a recently published Opinion of the ECB on, inter alia, amendments to the EU Capital Requirements Regulation (CRR), that the ECB supports the review of the calculation method for the leverage ratio.16 I have also previously voiced support as CPMI Chair for implementing the leverage ratio in a way that does not create disincentives for centrally cleared transactions, namely by offsetting the initial margin in the case of derivative exposures related to client clearing.17 All these exercises, however, should not be mistaken for tolerance of a relaxation of regulation. Post-crisis reforms aim to curb excessive leverage and reliance on short-term wholesale funding, and for good reasons. This is also why the Financial Stability Board (FSB) has published specific recommendations, including a framework for minimum haircuts for securities financing transactions (SFTs).18 The FSB has also assessed the potential financial stability risks related to collateral re-use in SFTs.19 The latter may contribute to a build-up of leverage and increase interconnectedness among market participants. The FSB concluded that regulatory reforms, in particular the leverage ratio and the liquidity requirements, are important to mitigate these risks. 8 / 10  BIS central bankers' speeches  This means that the implementation of the Basel III reforms will have effects on repo markets, as intended. These might look undesirable from an institution-perspective but they will have systemwide benefits. Conclusion Let me conclude. The repo market is undergoing significant change.
Finally, under the Title II resolution regime, the businesses and the franchise value of the subsidiary-level customer relationships will be maintained relative to a traditional bankruptcy proceeding, which in the past has often led to the liquidation of the bankrupt entity. As we saw in the case of Lehman Brothers, for financial firms, bankruptcy can destroy considerable value. This isn’t an argument against Title II resolution. Dodd-Frank’s addition of Title II to the resolution toolkit was an important advance to regulators’ ability to mitigate financial instability. But we must recognize that Title II by itself it is not sufficient to eliminate the advantages of being perceived as too big to undergo ordinary bankruptcy at the holding company level. Moreover, even with a viable Title II resolution regime in place, we must recognize that there still will be disruption to the financial system when a large firm fails. This suggests to me that while a Title II single point of entry resolution is a very useful tool that we should continue to develop, we should view it as more preferable to prevent the failure of the SIFI in the first place. In this regard, I think we have made considerable progress by raising capital and liquidity requirements for large, complex firms.