Continuing to build out its key attributes of effective orderly resolution with minimal risk of taxpayer bail-out, the FSB has asked for comment on guiding principles for funding the resolution of global systemically-important banks (G-SIBs). This consultation addresses only G-SIBs, not the non-bank systemic financial institutions governed by the overall resolution framework, and it does not explain how public funding would intersect with additional G-SIB buffers released by the FSB on total loss-absorption capacity (TLAC). Interestingly, the U.S. version of TLAC is premised on its value in preventing run-risk, not the solvency risk buffer noted by the FSB, perhaps contributing to the overall tone of this consultation which makes it clear that, despite its principles and objectives, actual practice may well differ in major ways across different regimes and in different circumstances. This consultation is based on findings that G-SIB resolution may be challenged by the lack of funding to support recapitalized G-SIBs and their critical operations under stress even if new standards designed to ensure operational continuity enhance service delivery and G-SIB resilience.
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