BoE and the Federal Deposit Insurance Corporation (FDIC) have published a joint paper on the use of a “top-down” resolution strategy for a UK or US global systemically important financial institution (G-SIFI) in a cross-border context. Under a “top-down” resolution (also known as “single point of entry” resolution), the holding company must be able to bail-in its shareholders and creditors to absorb losses sustained within operational subsidiaries. The UK strategy would involve transferring equity and debt securities to an appointed trustee while the valuation of losses, write-down and debt-for-equity exchange takes place. To preserve continuity of critical economic services, operating subsidiaries would be recapitalised by writing down their issued equity or debt held by their holding company. Given that UK G-SIFIs do not issue much debt at holding company level, debt held by the top operating companies of the group may also have to be subject to bail-in. Additionally, the Financial Services Compensation Scheme may have to contribute to recapitalising the holding company up to the amount it would have paid out to insured depositors of the group. UK authorities could also require that more debt is issued by the holding company. Ringfencing would also facilitate preserving operating subsidiaries that provide critical economic services. This joint paper is part of the ongoing cross-border dialogue that should minimise UK-US coordination risk and self-interested actions when a G-SIFI fails in the future. (Source: Resolving G-SIFs. A Joint Paper by FDIC and BoE)