To this end, the framework rests on two pillars: the first of these comprises better loss-absorbing capacity in comparison with other institutions. This is achieved by capital surcharges going beyond Basel III set according to the systemic importance of the given institution. The second pillar consists of mechanisms allowing the restructuring and resolution of SIFIs without plunging the financial markets into turbulence.
The example of the recently nationalised SNS Reaal in the Netherlands shows the importance of putting in place regulations in this sector. The SIFI framework was initially applied to globally systemically important banks. In a second stage, it was extended to banks which are systemically important at the domestic level.