Bail-in

A “bail-in” process for bank resolution is a potentially powerful “third option” that confronts this problem head-on. It would give officials the authority to force banks to recapitalise from within, using private capital, not public money.

Alternatively, where losses are not completely transferred to other creditors, the resolution fund can provide a contribution to the bank in order to cover the losses not absorbed through the bail-in and the capital shortfall, as well as to buy shares or other capital instruments of the bank under resolution in order to recapitalise it.