Politicians and regulators in the US, Britain and Europe are concerned about relative advantages and disadvantages in the global financial system. The real outrage, however, is that taxpayers have seen billions in lost wealth due to fundamental flaws in this system’s structure and incentives that have yet to be addressed.

For example, it is persistently rumoured that some major international banks, including Switzerland’s UBS and Barclays in Britain, are considering moving their investment banking operations to another country. In the case of UBS, such a move could help them escape Switzerland’s new 19 per cent capital requirement. Recent news reports, however, suggest that Swiss regulators may even favour UBS moving its investment banking activities abroad, so that their government no longer would face the risk of bailing out a company that is twice the size of the Swiss economy. Speculation about this then raised a question, posed in an editorial in this newspaper: “Any takers?”

Based on the current US financial structure and regulatory framework, my answer would be a clear “no!” Of course, a foreign bank could base its investment bank’s headquarters in the US. But once here, why would they not expand into commercial banking, to gain full access to the public safety net of deposit insurance and the Federal Reserve discount window? Any such move would then bring the liability of yet another systemically important bank able to take excessive risks.