First, it aims to increase the resilience of these critical institutions against severe financial shocks, the issue that I have emphasized thus far. Second, it also encourages the greater development and use of clearinghouses to address weaknesses identified in other parts of the financial system.
This means making sure losses in subsidiaries can be upstreamed to the parent company, and capital generated through bail-in can be downstreamed from parent to subsidiary. Without an efficient internal mechanism, bail-in simply will not work. It is good to know: this topic also has the attention of the SRB. Third, further work is needed on bail-in execution.