For the Debt Office to be able to implement resolution, the bank or institution must have sufficient own funds and liabilities that can be written down or converted into equity. Therefore, the Debt Office makes decisions on a minimum requirement for own funds and eligible liabilities for each bank and institution that is deemed systemically important.
The requirement is referred to by its abbreviation, MREL.
The purpose of MREL is to ensure that there is a sufficient amount of own funds and liabilities that can be written down or converted into equity if a bank or institution is in crisis. This allows the central government to take quick action and maintain the critical functions of the bank or institution without using taxpayers’ money. The requirement also helps clarify which lenders are to bear the primary costs for crisis management.
Frequently asked questions and answers about MREL