Randal K Quarles: Trust everyone - but brand your cattle: finding the right balance in cross-border resolution

Speech by Mr Randal K Quarles, Vice Chairman for Supervision of the Board of Governors of the Federal Reserve System, at the "Ring-Fencing the Global Banking System: The Shift towards Financial Regulatory Protectionism" Symposium, sponsored by the Harvard Law School Program on International Financial Systems, Harvard Law School, Cambridge, Massachusetts, 16 May 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you to Professor Scott for inviting me to join this discussion on cross-border resolution and risks of fragmentation. Like many of my international counterparts in the audience, I maintain a deep commitment to cross-border banking and efficient movement of capital and liquidity, which are important contributors to long-term economic growth. And it is with that commitment in mind that I have considered the topic of today's conference: "ring-fencing," beginning with some reflections on what the term means. Many here use the term to describe local capital and liquidity requirements, which are imposed ex ante on local subsidiaries and designed to protect those entities and their creditors from losses. The term is also used to refer to disruptive actions taken by host regulators to seize assets in the moment of crisis.1 This type of ring-fencing occurs suddenly and unilaterally.