Here, too, the focus lies on increasing the quantity of capital held, as a central component of the FSB concept are systemic capital surcharges for SIFIs that go well beyond the requirements of Basel III.
These surcharges can take the form of a higher tier 1 capital ratio or contingent capital, ie debt that converts into equity if the institution becomes distressed, for example contingent convertibles. These are all important steps towards enhancing individual institutions’ resilience through more and better-quality capital. They simultaneously strengthen the resilience of the financial system as a whole.