One of the main thrusts of these new regulatory packages was to introduce instruments that curb the risk caused by the size and concentration of institutions – that is to say, instruments which tackle the too-bigto-fail problem head on. The Recovery and Resolution Act for banks came into force in Germany at the beginning of this year.
Starting in January 2016, systemically important banks will need to build up additional capital buffers. As from 2019, global systemically important banks will have to maintain sufficient total loss-absorbing capacity, or TLAC, in the form of debt and equity capital, which can be tapped in a resolution or recovery event.