The Financial Stability Board (FSB) has published two guidance documents to assist authorities in implementing its Key Attributes of Effective Resolution Regimes (Key Attributes) for global systemically important banks (G-SIBs):
- Principles on Bail-in Execution – the Key Attributes require FSB jurisdictions to provide for the powers and tools to achieve bail-in, and the FSB’s standard on Total Loss-absorbing Capacity (TLAC) defines a minimum requirement for the instruments and liabilities that should be readily available for bail-in within resolution at G-SIBs. However, neither the Key Attributes nor the TLAC standard addresses the operational aspects of executing a bail-in transaction. Therefore these principles focus on operationalising the “bail-in period” of resolution covering: (i) bail-in scope; (ii) valuation; (iii) exchange mechanic; (iv) securities law and securities exchange requirements; (v) governance; and (vi) communications. Whilst the principles have been developed with a focus on the bail-in of instruments and liabilities that count as TLAC, they are also applicable in jurisdictions where the liabilities potentially subject to bail-in are broader than the TLAC standard. The principles, or parts thereof, may also be applicable to firms other than G-SIBs to the extent that the application of bail-in powers is envisaged under the authorities’ resolution strategy for those firms; and
- Guiding principles on the temporary funding needed to support the orderly resolution of a G-SIB. These guiding principles focus on three specific aspects of the temporary liquidity needed to support the orderly resolution of a G-SIB group: (i) ways to encourage and maintain as much private sector funding as possible to the firm in resolution; (ii) the role and types of public sector backstop mechanisms for providing temporary liquidity to the extent necessary to support the orderly resolution of a G-SIB; and (iii) elements of public sector backstop mechanisms that support the minimisation of moral hazard risks.