Half of jurisdictions face gaps in resolution backstop funding
Approximately half of jurisdictions still exhibit material gaps in public sector backstop mechanisms for failing systemic banks, a Financial Stability Board review found on October 9, 2026. The peer review urges authorities to establish credible funding frameworks before acute crises emerge.
Fifteen years of unfinished frameworks
The Financial Stability Board (FSB) evaluated member jurisdictions on their readiness to provide public sector backstop funding to global systemically important banks in resolution.
Fifteen years after adopting Key Attribute 6 in 2011, roughly half of examined authorities exhibit material gaps in last-resort mechanisms.
Chaired by Banco de España Deputy Governor Soledad Núñez, the review followed the 2023 bank failures, which revealed how fast acute liquidity stress can deplete private buffers.
The FSB set out six recommendations to ensure full execution.
“Having a credible public sector backstop funding mechanism is essential,” Núñez said, noting that functional funding tools keep institutions out of public ownership.
Preparation beats improvisation
The FSB established its resolution framework to unwind failing lenders without systemic disruption or taxpayer losses.
While authorities have developed multiple viable backstop models, the review warns against improvising funding arrangements during acute panic.
The FSB, chaired by Bank of England Governor Andrew Bailey, coordinates rules across 24 member jurisdictions and engages with 70 additional economies.
Secretariat staff in Basel will now track progress on Guiding Principles to ensure public funding tools operate effectively before another severe liquidity shock hits.
A chronic blind spot
Unresolved backstop gaps fifteen years after the 2011 standards reflect sluggish regulatory execution.
Warning against panic improvisation is futile when half of member jurisdictions still lack statutory funding tools.
Without binding deadlines, the peer review risks becoming another ignored post-crisis reminder.