The Institute of International Finance has submitted its response to the Consultative Document on “Effective Resolution of Systemically Important Financial Institutions” published by the Financial Stability Board (FSB) on July 19, 2011. The response has been prepared by the IIF’s Working Group on Cross Border Resolution, chaired by Urs Rohner, Chairman of the Board of Directors, Credit Suisse Group AG.

The IIF fully supports the objectives and appreciates the overall direction of the recommendations of the consultative document. As the Institute has consistently advocated, effective resolution is essential to achieving financial stability and addressing moral hazard: major, cross-border institutions that fail should be capable of being resolved without systemic disruption, without unnecessary loss of value, and with absorption of losses by equity holders and unsecured debt holders, while precluding imposition of losses on the state.

Convergence toward credible national regimes, strong coordination among resolution authorities, good institution-specific cooperation agreements, and equitable cross-border outcomes on a non-discriminatory basis, are all significantly advanced by the FSB’s work reflected in the consultative document. The industry stands ready to participate in further work and dialogue in order to leverage the insights and solutions of all parties.