This bolstered the confidence of counterparties in one another and restored market and funding liquidity. Of course, this type of lending is only feasible to an institution that is deemed to be solvent with sufficient collateral available to pledge to the lender-of-last-resort so that it can safely secure its loan. In practice, all of these methods are in place to address funding liquidity risk. Capital requirements have been increased; there is much better reporting about how firms will do under significant stress tests; liquidity requirements – such as the liquidity coverage ratio – provide a buffer that allows management more time to respond to problems; and, if necessary, the central bank can act as the lender-of-last-resort to support market confidence and funding liquidity. So, should more be done to support funding liquidity? In my view, an important issue is to identify and address gaps in the lender-of-last-resort function. In the U.S., some significant gaps remain. For example, the Federal Reserve has a very limited ability to provide funding to a securities firm, even on a fully collateralized basis. The Discount Window is only available to depository institutions, and Section 23A of the Federal Reserve Act severely constrains the ability of a depository institution to pass Discount Window funding along to its securities affiliate.
The standardisation of messaging and APIs can enable quicker, cheaper and safer  Page 7  payments. But implementing the technical changes is only the first step. Common practices and usage guidelines are essential in helping financial institutions operate across borders. Importantly, the industry panel will not seek to add another competing standard. Rather, it will evaluate existing API standards and develop recommendations for harmonisation based on current practices. It will also seek to develop lasting global governance forums to evolve and update the standards. The Call for Participation[17] is closing at the end of this month and I would encourage all relevant parties to consider applying. Legal, regulatory and supervisory frameworks Diverging approaches to regulation and supervision are a major source of friction in cross-border payments, and an area where I increasingly hear calls for change from the private sector. Differences in how banks and non-banks are supervised can create opportunities for regulatory arbitrage. There are very good reasons why nations adopt differing approaches to financial institution supervision, data protection and financial crime prevention. Nevertheless, international guidance and recommendations provide a strong principles-based framework for collaboration and interoperability between jurisdictions. A key part of the existing international framework for combatting financial crime is The Financial Action Task Force (FATF) Recommendations. [18] To remain effective, they need to keep pace with market developments. Global adoption of ISO20022 standards also offers an opportunity to harness the benefits of improved data.