It is indispensable, especially in Europe, that similar measures be based on common principles, in order to avert competitive disparities between intermediaries of different countries and between banks exposed in differing degrees to the problem of impaired assets. Second, in determining recapitalization objectives, it is vital that the definitions of bank capital be the same at international level.
Third, the authorities have made it clear that they intend to protect all systemically important institutions, endow them with the capital needed to face stress conditions, protect depositors and have the shareholders alone bear any losses. To all intents and purposes banks’ other creditors are protected against losses.