To ensure that bondholders, shareholders and management – rather than taxpayers – bear the brunt of losses, all FSB member countries have committed to have in place a bail-in authority and will have specific plans by the end of this year to recover or, if necessary, resolve these firms.
The framework for systemic institutions is now being extended to domestic banks, global insurers, and key shadow banks, such as hedge funds. When implemented, greater supervisory intensity and higher loss absorbency will ensure that the financial system is never again beholden to the fate of a single firm or group of firms.