The banks we allow to access our markets need to meet the high standards we expect and be capable of being effectively supervised. What does responsible openness mean? Sam Woods set out the three pillars of responsible openness in 2019 (and, also built upon this in his Mansion House speech3 last November). 1. First that we should engage strongly in international standard-setting processes and make sure that we are at the forefront of implementing those rules in a thorough way; 2. Second that we adopt practices and structures which promote strong collaboration with colleagues in other jurisdictions; and 3. Third, that we are open to hosting cross-border business in the UK – but only if it is resilient and appropriately controlled and governed, and if we have sufficient visibility of and influence over the necessary supervisory outcomes. My policy colleagues take the lead on our work in international standard setting. As we have reinforced many times now4, we have absolutely no intention of weakening prudential regulation in the UK. The changes that we introduced post 2008, have stood the banking sector in very good stead, for example in enabling it to withstand the stresses posed by the Covid pandemic in 2020. This statement sets out our expectations on the second and third of these pillars.
Supervisory Cooperation  To support responsible openness to international wholesale banking, be it as branches or subsidiaries, and to meet our objectives on safety and soundness and financial stability, we need confidence that: a. the Home State Supervisory regime delivers outcomes which are sufficiently equivalent to the UK regime; b. there is effective supervisory cooperation; and c.  3 4  there is assurance over the home state resolution framework. https://www.bankofengland.co.uk/speech/2020/sam-woods-city-banquet https://www.bankofengland.co.uk/financial-stability-report/2020/december-2020 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  The first and last points concern in large part the legislative framework, rules and powers of intervention that home states and authorities have. The better the outcomes they deliver, so the more reliance we can place on risks arising from overseas operations being manageable. The second point is about how those powers are applied, the practices, and openness of overseas authorities that wield them. It is on this point that I want to focus as a supervisor. Cooperation with Home State Supervisors  For both branches and subsidiaries, the PRA places reliance on cooperating closely with the Home State Supervisor, for branches this is particularly the case for prudential requirements, because a branch is not a separate legal entity. But for both there needs to be effective regulatory and supervisory cooperation if openness is to be ‘responsible’. We have a long history of working very effectively with a range of supervisory authorities, including the US, EU, Switzerland, Japan, and many others.