Explanation:
One of the critical components of the post-2008 international resolution framework that proved effective in the Credit Suisse case was the existence of significant Total Loss-Absorbing Capacity (TLAC). The availability and subsequent write-down of its AT1 (Additional Tier 1) capital instruments demonstrated the functional intent of TLAC, providing loss absorbency and facilitating its acquisition by UBS without wiping out all stakeholders immediately.
Options A and D are incorrect because massive public sector support (such as liquidity lines from the Swiss National Bank and government guarantees) was necessary to finalize the transaction. Option B is incorrect as navigating the crisis heavily required cross-border regulatory cooperation given Credit Suisse's global footprint.
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Q.5 While the Credit Suisse case presented significant challenges, certain aspects of the international resolution framework proved to be strengths in managing the crisis. Which of the following was a key strength demonstrated in this case?
A
The complete avoidance of public sector financial support.
B
The absence of any need for cross-border cooperation.
C
The existence of substantial Total Loss-Absorbing Capacity (TLAC).
D
The exclusive reliance on commercial transactions to resolve the crisis.
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