Let me try to strip it down. You referenced Basel III, and that's absolutely right. Basel III is the standard for how much capital and the type of capital that banks have to hold, and how much liquidity they should hold as well. The core of Basel III makes the world's banks look more Canadian.
There are some innovations to the way we did things in Canada as well, but basically we added on top of all the complexity a very simple test that will apply globally, which is how many assets you have over how much base capital. You shouldn't let that get too big, because there are limits to knowledge, and the things you think aren't risky tend to be the things that really do have a lot of risk. That was one of the core lessons of the financial crisis and one of the reasons we did well.
We've added some very common sense elements to the standard. We've stripped out a lot of financial engineering in the quality of capital so that equity is true equity and there is realy some loss absorption base there. The important thing is going to be to make sure that people implement it, and that they implement neither too quickly nor too slowly, but in a timely manner. The world's banks were shown to be woefully undercapitalized as a whole--not the Canadian banks, but the global banks--and that was part of the reasons for the crisis.
We don't have time to go into it now, but one of the things we're really focused on at the bank and through the financial stability board is making sure that all these great rules that have now been written are actually implemented, not just in Canada--where they will be, without question--but also in Europe, the United States, and our major partners.
I will quickly mention the second two things. There are a series of very complex initiatives that work on the plumbing of the financial sector. They work through the short-term repo markets, which are one of the core markets through which banks are funded, and the derivative markets. The point of those initiatives is to remove the types of risks that are still present in global markets in relation to how the failure of a certain bank would affect all the other players. There is still tremendous uncertainty about that. If you can neutralize that risk, then a certain bank can fail if it makes mistakes--and it should fail--but others can get on with their business. Then we won't have to have special sessions during August, although we're always happy to do them.
In terms of the repo market in Canada, we have made some serious changes that should be on stream later this year or early next year. Those changes will further improve our functioning in that area.
The last thing is the other big element of initiative. We have focused on the banking sector as a whole, “we” meaning the global community. Give or take, that is anywhere from a third to a half to a maximum of two-thirds of the financial sector in any given country. In Canada it is about one-half. What about the whole other side? Some people call it “shadow banking”; we prefer the term “market-based finance”, because it's actually about having markets and having the markets working. We need to look at the interaction between markets and banks and ensure that they are resilient, so that we don't get effects from markets cascading back onto the banks and ending up affecting the ability of individuals, Canadians, to have a mortgage or to borrow for somebody's education or for a new business investment.