Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/165979
Authors: 
Berger, Bennet
Hüttl, Pia
Merler, Silvia
Year of Publication: 
2016
Series/Report no.: 
Bruegel Policy Contribution 2016/12
Abstract: 
The European Union's Bank Recovery and Resolution Directive foresees a "minimum requirement for own funds and eligible liabilities" (known as MREL) that banks need to comply with in order to ensure the effectiveness of the bail-in tool. The details of how MREL should be constructed in practice are under discussion. We look at alternative ways to compute MREL, showing how the choice of the benchmark metric (risk weighted assets, total assets or leverage exposure) can change the allocation of requirements across banks. We also review MREL in light of the global effort to ensure future resolvability of banks, highlighting some differences with, and inconsistencies in relation to, the Financial Stability Board's total loss-absorption capacity (TLAC) measure.
Document Type: 
Working Paper
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