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Ref: 11/2026

  • Credible public sector backstop funding mechanisms are necessary, as a last resort, to achieve orderly resolution.
  • Review finds that while significant progress has been made, further work is needed in a majority of jurisdictions to be ready, if necessary, to provide public funding to a systemic bank that goes into resolution.
  • FSB recommends jurisdictions take action to ensure that arrangements are in place before a crisis, rather than improvised under pressure.

The Financial Stability Board (FSB) today published a Thematic Review on Public Sector Backstop Funding (PBFs) Mechanisms. The review forms part of work initiated after the 2023 bank failures. The 2023 bank failures demonstrated how quickly a bank can experience acute liquidity stress. A PBF mechanism is the last resort if all other sources of liquidity are used up. It is one part of the comprehensive approach to ensuring global systemically important banks (G-SIBs) have reliable access to liquidity in resolution. A credible mechanism can mean failing banks don’t have to be taken into public ownership.

The review did not assess the full range of resolution powers and tools, focusing instead on public sector liquidity provision as a last resort. Fifteen years after the FSB issued its recommendations on designing a PBF, approximately half of jurisdictions still have material gaps. The review also shows there are multiple ways to design a PBF that can fully meet the FSB’s high standards.

The report recommends that jurisdictions take urgent action to improve their PBF mechanisms. It sets out six recommendations for jurisdictions to achieve full and consistent implementation of the FSB Recommendations. The report also recommends that the FSB supports member jurisdictions in implementing these recommendations by sharing good practices, reviewing and building on existing implementation materials where necessary, and closely monitoring progress in implementing Key Attribute 6 and its Guiding Principles.

Soledad Núñez, Deputy Governor, Banco de España, and Chair of the peer review, said “The FSB has set a demanding but necessary standard for the design of public sector backstops. Having a credible public sector backstop funding mechanism is essential. This report does not assess jurisdictions’ overall ability to respond to financial crises, but it does identify one critical issue that needs addressing. Further work is urgently needed to complete implementation of the FSB’s recommendation on public sector backstops.”

Notes to editors

The FSB adopted the Key Attributes of Effective Resolution Regimes for Financial Institutions in 2011, with the aim of facilitating the resolution of financial institutions without severe systemic disruption or taxpayer losses, while protecting vital economic functions. One element of an effective resolution regime is a public sector backstop funding mechanism, which, if needed as a last resort, can provide temporary funding to firms in resolution to support orderly resolution.

The objective of this review is to examine progress made by FSB member jurisdictions in implementing Key Attribute 6 and the Guiding Principles on the Temporary Funding Needed to Support the Orderly Resolution of a Global Systemically Important Bank (“G-SIB”), which relate to the establishment of public sector backstop funding mechanisms. The review was prepared by a team of experts from FSB member institutions and chaired by Soledad Núñez. Deputy Governor, Banco de España.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Andrew Bailey, Governor of the Bank of England. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.