There is a lively debate in the US at the moment about the most appropriate regulatory structure for all financial institutions, and particularly for investment banks. This tends to be regarded in the US largely as an internal matter. But the fact that the large US financial institutions have a global reach inevitably makes that debate a matter of great interest and concern to the international financial community. We are optimistic that legislation will soon be enacted to address these concerns. It would certainly be disappointing if it is not. Conclusions Though I have attempted this morning to identify some features of regulation on which we might well agree, I doubt whether there is such a thing as an ‘optimal’ regulatory structure. Each country has its own legacy of supervisory structures and approaches. But an appropriate international structure is one which works as seamlessly as possible and has clear lines of responsibility (at least, that is what we expect from international banking groups’ controls). One co-ordinating regulator for each institution could play a crucial role in such a structure. The question of the number of regulators is, in my view, less important; no one has yet suggested we set up one body world-wide to carry out all supervision, so whatever our own vision of an optimal regulatory structure, it will have at its centre a requirement for supervisors from different disciplines and in different countries to communicate effectively with one another. This weekend’s conference is a good opportunity to do that. BIS Review 21/1997
6  BIS Review 31/2008  Chart 1: Current account balances in the first wave of financial globalisation  Chart 2: Number of sovereign wealth funds since the 1950s  Per cent of own GDP United Kingdom Germany 15 Western Europe France 10  Number of SWFs 30 25  5 0  20  -5 15  -10 -15  10  -20 Canada Australia Argentina  -25 'New World' countries  5  -30 -35  1870  1877  1884  1891  1898  1905  1912  Source: Taylor, A (2002), “A century of current account dynamics”, Journal of International Money and Finance, pp 725-748. 0 1950s 1960s  1970s 1980s  1990s 2000s  Source: Morgan Stanley, Deutsche Bank  Global map 1: Current account positions (% of own GDP) in 1997  Source: IMF, World Economic Outlook, 2007  BIS Review 31/2008  7  Global map 2: Current account positions (% of own GDP) in 2007  Source: IMF, World Economic Outlook, 2007  Chart 3: Global holdings of fx reserves (excluding gold), 1995-2007 $  China Japan Russia Other Asia (a) Other EMEs Developed countries (b)  7 6 5 4 3 2 1 0  1995  1997  1999  2001  2003  2005  2007  Source: International Financial Statistics. (a) Excluding China and Japan. (b) Excluding Japan.