Federal Reserve finalises rules to help unwind big banks




The new rule will create a safe harbour for financial contracts after a firm defaults. The Federal Reserve finalised a new rule that should make it easier to wind down systematically important US banks by creating a safe harbour for financial contracts after a firm defaults.

The decision, unanimously approved by Fed board members, forms part of global post-crisis efforts to end ‘too big to fail’ institutions that are so large they could endanger the entire financial system if they fall into bankruptcy.

The rule requires global systematically important banks (GSIBs) to amend the language in common financial contracts so they cannot be immediately cancelled if the firm enters bankruptcy.




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