This experience prompted Asian economies to review their policy frameworks flexibly so as to become more resilient to global shocks. For instance, in terms of foreign exchange policy, the de facto fixed exchange system pegged to the US dollar was replaced by a more flexible system. Foreign reserves were accumulated at a rapid pace.
But, to put this theoretical resolution model into practice, institutions will need to hold a certain amount of additional debt which, should the need arise, will be transformed into loss-absorbing capital. For global systemically important financial institutions, this will be achieved by way of the TLAC standard, which the FSB will finalise this autumn.