Discussion of Regulatory Challenges of Cross-border Banking: Possible Ways Forward

In general I agree with Stefan Ingves’ proposition that cross-border banking generates negative externalities and makes transnational confl icts of interest more likely. Small host countries such as New Zealand are particularly vulnerable to such confl icts and externalities, particularly in times of crisis. There are a number of different ways to approach this issue, one of which is Stefan’s solution involving the creation of a supra-national supervisory agency. However, rather than comment on his specifi c proposal, I will outline the approach that we are taking in New Zealand in the context of our relationship with Australia.