Bail-In Liabilities: Replacing Public Subsidy with Private Insurance24 June 2013 by KPMG
Most of the regulatory reform initiatives introduced in the wake of the financial crisis have been designed to make financial institutions safer. But there have also been moves to reduce the damage that would be caused by the failure of a financial institution. This 'resolution' agenda focuses on:
- Preserving the continuity of critical economic functions and minimising disruption - which will be easier if the authorities can put some failing financial institutions into resolution rather than liquidation
- Making creditors rather than taxpayers meet the costs of resolving a failing financial institution
Bail-in liabilities - liabilities that could be written down or converted into equity when the authorities put a failing financial institution into resolution - are being introduced as a key component of resolution regimes.
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Bail-In Liabilities: Replacing Public Subsidy with Private Insurance