Ahead of this weekend's G20 Leader's Summit in Brisbane,
the Financial Stability Board (FSB) has published its proposals to require global systemically
important banks (G-SIBs) to hold a minimum amount of capital plus
bail-in-able debt, known as 'TLAC'. While this is by no
means the end of the journey to eliminate 'too big to
fail', these proposals represent the last major outstanding
piece of post-crisis prudential policy for banks. A quantitative
impact study (QIS) will be run in 2015, before finalisation of the
proposals. This process will not be a formality – there are
questions of substance left to address.
The proposals are primarily of interest to G-SIBs, but given the
potential read across to domestic systemically important banks
(D-SIBs) and other firms, non G-SIBs should also take an interest.
This is particularly the case in the EU in light of the minimum
requirement for own funds and eligible liabilities (MREL), which
applies to all banks and investment
