Reply #27: Too big to fail banks to be determined in mid-2011

[Demeter]

http://www.reuters.com/article/idUSTOE69L0A920101023


...The Financial Stability Board is to propose to leaders of the Group of 20 leading economies a global framework for regulating systemically important financial institutions (SIFIs) at their Seoul Summit in November. But the set of banks this framework will apply to will not be determined until the middle of next year, and even then no such list will be made public.

"A set of qualitative and quantitative indicators will be produced by year-end and by then there will be a discussion which will empower the FSB to identify the SIFIs," FSB chairman Mario Draghi told reporters on the sidelines of the G20 finance ministers meeting in Gyeongju, South Korea...

The framework, which is expected to be endorsed by the G20, will require that regulators can resolve the failure of a SIFI without causing market disruption or using taxpayer support.

Financial authorities will also have to ensure that these banks have extra "loss absorbency" capacity. However the FSB will not specify up front what measures regulators must impose, letting them decide instead the most suitable out of capital surcharges, contingent capital and bail-in debt...