Explanation:
The 2023 US bank failures (such as Silicon Valley Bank and Signature Bank) highlighted that regional banks (non-G-SIBs) lacked mandated loss-absorbing capacity (such as Total Loss-Absorbing Capacity or long-term debt requirements) that could have facilitated an orderly resolution. These banks actually relied heavily on uninsured deposits, were subjected to less stringent regulatory oversight, and had less extensive resolution planning compared to G-SIBs, leaving authorities with limited tools when rapid deposit outflows occurred.
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Q.67 The US bank failures of 2023 exposed several weaknesses in the existing resolution framework, particularly regarding institutions not designated as G-SIBs. What key weakness was highlighted concerning these banks' ability to withstand rapid deposit outflows?
A
The strict regulatory oversight they were subjected to.
B
The limited reliance on uninsured deposits in their funding models.
C
The absence of mandated loss-absorbing capacity requirements, such as long-term debt.
D
The extensive pre-failure resolution planning conducted by regulatory authorities.
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