Financial Stability Board unveils $1.19 trillion plan to prevent “too big to fail”
The world's biggest banks could be forced to issue as much as $1.19 trillion (£790bn) in bonds by 2022 under new regulations set out earlier today.
The Financial Stability Board (FSB), which was set up by the G20 after the financial crisis to coordinate regulation across the group’s economies, published the new rules for the world’s 30 largest lenders – so-called global systemically important banks (GSIBs) – ahead of next week’s meeting of G20 leaders in Turkey.
Under the new regulations, GSIBs including British lenders HSBC, Barclays, Royal Bank of Scotland and Standard Chartered will be required to have a total loss-absorbing capacity (TLAC) equivalent to at least 18 per cent of its assets by 2022 – ensuring a sort of financial safety net so that big banks could absorb failures without threatening the wider financial system.
Bank of England governor Mark Carney, who chairs the FSB, said: “It is clear the benefits far exceed the costs of introducing this standard.”