Global watchdog urges authorities to close gaps in emergency funding for failing banks
XLF•The Financial Stability Board urged authorities to strengthen emergency funding arrangements after finding fewer than half of jurisdictions had arrangements that were clearly defined, large enough and deployable quickly. It found only Hong Kong, Japan, the United States and the United Kingdom fully compliant with its requirements.
1. Funding gaps identified
In a peer review of progress against standards for resolving banks without taxpayer-funded bailouts, the FSB found fewer than half of jurisdictions had emergency funding arrangements that were clearly defined, large enough and capable of being deployed quickly. Hong Kong, Japan, the United States and the United Kingdom were fully compliant; India and Argentina were non-compliant, while the EU banking union and Switzerland were among those deemed materially non-compliant.
2. Recommendations for authorities
The FSB recommended that authorities identify in advance what temporary public funding could be made available during a bank failure, establish a clear legal basis for support and ensure they have powers to recover losses. The review is part of work launched after the 2023 banking turmoil, including Credit Suisse's collapse and rescue by UBS.
