This view is held quite strongly in Asia where banks tend to have high levels of equity capital. Under this approach, concerns about “illusory capital” could be addressed by enforceable triggers to allow early intervention when excess capital runs down to a point that breaches the GLAC requirement.
Moreover, the more genuine equity a bank has, the more likely it can remain a going concern in the face of a given shock. It would still need to have a degree of recapitalisation, by a share issue, and perhaps would need to call on contingent capital instruments, triggered by some sort of capital threshold.