Regulatory
FSB finds gaps in public sector backstop funding for bank resolution
10 October 2026 · FSB
The FSB's peer review on public sector backstop funding mechanisms finds that most member jurisdictions lack a pre-arranged, credible backstop capable of funding large systemic banks in resolution, weakening Key Attribute 6 implementation.
Points to Remember
- FSB adopted Key Attributes of Effective Resolution Regimes in 2011; Key Attribute 6 deals with funding in resolution.
- Backstop funding should be temporary, last resort, and arranged in advance to avoid disorderly failure or costly bailouts.
- Most FSB jurisdictions have not arranged such a backstop in advance for large systemic banks.
- Mechanisms need taxpayer loss recovery tools and safeguards against moral hazard.
- Report makes recommendations to FSB member jurisdictions and the FSB.
Why it matters
Awareness of global resolution funding principles helps Indian bankers understand crisis-preparedness expectations if their bank is ever systemically important.
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