In resolution, the most important difference between capital and liquidity is the speed with which financial stress can appear. Liquidity needs are sudden and tend to manifest in all areas of the organization, and the consequences of not meeting liquidity demand-an immediate default on an obligation--can be grave.
Capital needs, however, may be more localized and slower to evolve but are foundational to the execution of an SPOE resolution. It is unlikely that host regulators would be comfortable cooperating in an SPOE resolution strategy without some confidence in the viability of the entities in their jurisdictions. U.S.