A framework for dealing with domestic systemically important banks
A D-SIB framework is best understood as taking the complementary perspective to the G-SIB regime by focusing on the impact that the distress or failure of banks (including by international banks) will have on the domestic economy. As such, it is based on the framework for dealing with domestic systemically important banks assessment conducted by the local authorities, who are best placed to evaluate the impact of failure on the local financial system and the local economy.
The principles developed by the Committee for D-SIBs allow for appropriate national discretion to accommodate structural characteristics of the domestic financial system, including the possibility for countries to go beyond the minimum D-SIB framework and impose additional requirements based on the specific features of the country and its domestic banking sector. The principles focus on the higher loss absorbency (HLA) requirement for D-SIBs. Other policy tools, particularly more intensive supervision, can also play an important role in dealing with D-SIBs. The principles were developed to be applied to consolidated groups and subsidiaries. However, national authorities may apply them to branches in their jurisdictions in accordance with their legal and regulatory frameworks.