The presence of a substantial tranche of long-term unsecured debt that is subject to bail-in during a resolution and is structurally subordinated to the firm’s other creditors should reduce run risk by clarifying the position of those other creditors in an orderly liquidation process.
A requirement for long-term debt also should have the benefit of improving market discipline, since the holders of that debt would know they faced the prospect of loss should the firm enter resolution.