I would then like to say a few words about the proposed revisions to the capital requirements for international banks, announced last week by the Basel Committee; not just because it is topical but also because these capital requirements are central to the stability of the system and its capacity to withstand shocks; and as cautious central bankers it is important to take stock from time to time. US & UK Economic Ties As a very open economy, and one with close trade and investment links with the US, especially in the financial sector, the UK is a keen observer of events here. While much has been made in recent years of globalisation, the links between the US and UK are long-standing and deep-rooted, not least in the financial sector. For many years US financial institutions have been among the biggest players in the City. US firms take the top three positions in London as bookrunners in international bond and equity issues, and as arrangers of syndicated credits. Through their dynamism and innovation, US firms also play a major role both in maintaining London's pre-eminence as an international financial centre and as a potent force for strengthening the competitiveness of the UK's own financial institutions. Our interest in the continued financial strength of US firms is thus clear. Foreign banks are similarly active in US markets. For example, they account for 40% of the US syndicated loan market regularly surveyed by the Fed.
It is also an appeal for application of a timehonored managerial principle: greater autonomy and discretion of local management to develop a tailored approach that balances risk, complexity, and effectiveness appropriate for the needs of a particular institution, and a corresponding accountability upon local management for the results. Absent this sensibility I will state my fear plainly: beware the risk management industrial complex. Provocative Question Number 3: To what extent might the invocation of manual procedures in “protracted outage” scenarios exacerbate rather than assuage from a financial stability perspective? As you know, the CPMI-IOSCO cyber guidance exhorts financial market infrastructures to consider alternatives for processing critical transactions in the event automated means of recovery are not successful. We are therefore compelled to consider not merely “star wars” resiliency but also “stone age” contingency. Locally, this work proceeds across multiple fronts, including analyzing and parsing our transaction flow to identify systemic activity, developing procedures and tools to facilitate 3/5  BIS central bankers' speeches  operations in a manual mode, and conducting simulation exercises with systemically important customers and interfacing financial market infrastructures to test our hypotheses and procedures. I would be remiss, especially in recognition of our Clearing House venue, not to herald our partnership to support each other in the event either the Fedwire Funds Service or CHIPS experiences an operational disruption from which it cannot recover on a same day basis.