FSB Issues Guidance on Resolution Planning for Systemically Important Banks

The Financial Stability Board ("FSB") published two papers providing further guidance to financial institutions on resolution planning. The FSB noted that both papers complement a previously published policy document, "Key Attributes of Effective Resolution Regimes for Financial Institutions," which establishes a policy framework for the resolution of systemically important firms.

The first paper, "Guiding Principles on the Temporary Funding Needed to Support the Orderly Resolution of a Global Systemically Important Bank ("G-SIB")" outlines principles for temporary funding in resolution, and addresses the risk of banks having insufficient liquidity to maintain the continuity of critical functions in resolution. The paper focuses on helping institutions resolve G-SIBs effectively without requiring bailouts by the public sector.

The second paper, "Guidance on Arrangements to Support Operational Continuity in Resolution," addresses operational considerations such as legal, contractual and governance frameworks, resourcing and management information systems, and financial resources.

The FSB stated:

There is no presumption that firms, or certain types of firms, should adopt any particular model. The purpose of the guidance, rather, is to identify features and arrangements that are likely to reinforce the resilience of those models with a view to supporting continuity of the services provided in resolution.

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