Finally, I would like to briefly discuss an important unresolved part of the story: the future of central bank swaps of the type initiated between the US Fed and several other central banks  8  See IMF discussion paper on “Cross-Border Bank Resolution: Recent Developments”. June 2014. 9  I have described this case in more detail in other publications and speeches. See in particular: Már Guðmundsson and Thorsteinn Thorgeirsson (2010) op. cit. Már Guðmundsson (2011) “The Fault lines in cross-border banking: Lessons from the Icelandic case”. OECD Financial Market Trends. Vol. 2011, Issue 2. Paris; and keynote address at the “Eighth High-Level Meetings for the Middle East & North Africa Region: Recent Policy Developments for Strengthening the Resilience of the Financial sector”, Abu Dhabi, 28 November 2012. 4  BIS central bankers’ speeches  around the globe during the crisis10. It should be noted, however, that there are several other arrangements around the globe which, with time and modifications, could become partial substitutes for these swaps. Examples of this are the multilateralisation of the Chiang Mai Initiative in this part of the world, swap lines among BRIC countries, and the bilateral swap network of the People’s Bank of China. But as they are currently constructed, these are not well suited to large-scale and speedy provision of liquidity in reserve currencies more or less directly to internationally active banks.
Again, the biggest strides have been taken in the realm of supervision, but a greatly improved resolution framework is also in the process of being introduced. A common deposit insurance system is not yet on the agenda, however. That might be an impediment to further banking integration and potentially a source of vulnerability. EU members outside the euro area can opt into banking union. This introduces the possibility of deep banking integration without a LOLR, which is a risky combination, as we have seen. That risk could of course be mitigated through uncapped central bank swaps and mutual acceptance of collateral, but as far as I can see, there is as yet no formal framework for this. In this connection, I note with interest the plans in this region to progress with regional banking integration by, for instance, the ASEAN. The benefits will be substantial, but we need to be mindful of the risks and learn from the European experience. As I see it, banking integration without a monetary union or alternative arrangements for FX liquidity provision is potentially very risky. That said, recent events have shown that a monetary union without a banking union is also risky. At the global level, there has been some progress on the framework for supervision, crossborder crisis management, and resolution of cross-border banks through the work of the Financial Stability Board (FSB).