For the Debt Office to be able to carry out resolution effectively, 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 deemed systemically important.
This requirement is called the Minimum Requirement for own funds and Eligible Liabilities, referred to by the abbreviation MREL.
The purpose of MREL is to ensure there are sufficient 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.
In November 2019, the Debt Office began publishing all institutions’ individual compliance with their MREL requirements.
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Frequently asked questions and answers about MREL