Several countries did pass bail-in laws around 2017, although the process wasn’t always widely publicized. For example, Australia passed the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill in February 2018, which included bail-in provisions. Similarly, the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, passed in 2010, also includes bail-in mechanisms.
Bail-in laws allow banks to convert debt into equity to increase their capital requirements, using funds from unsecured creditors, including depositors with balances above insured limits. This approach aims to prevent taxpayer-funded bailouts by shifting the financial burden to the bank’s creditors and shareholders.
Sources:
www.investopedia.com/articles/markets-economy/090716/why-bank-bailins-will-be-new-bailouts.asp
fortune.com/recommends/banking/what-is-a-bail-in/
Nations quietly passed Bail-In laws in 2017.
Governments won’t be bailing out banks this time, you will be. 🤫 t.co/mBGl8mnsJB pic.twitter.com/LZBZnbZkYm— Financelot (@FinanceLancelot) July 27, 2024
A crisis is coming. t.co/Zhi4o3VxTz pic.twitter.com/8xZNClhrpk
— Financelot (@FinanceLancelot) July 26, 2024