We believed that this would best combine loss absorbency and market discipline with legal certainty and the stability of markets. The designated bail-in instruments would have clear pre-specified terms and holding restrictions, which would prevent other banks from holding these debt instruments. In addition, we proposed that the governance and control of banks ought to be strengthened further.
Particular attention ought to be given to the ability of management and boards to run large and complex banks, the powers of the risk management function and the quality, comparability and transparency of risk disclosure, the possibility to use designated bail-in instruments in remuneration schemes, and the appropriateness of imposing caps on variable as well as overall compensation.