Box 1 – Key outcomes

Improved capital effectiveness – Fewer uncertainties and complexities that could undermine confidence, and hinder recovery or resolution.

Reduced compliance costs – Banks are no longer subject to the regulatory burden around design, marketing and issuing of AT1.

Enhanced proportionality – A simpler approach and lower capital requirements for smaller, domestic banks.

Box 2 – Current vs proposed frameworks

Simplifying the capital framework by replacing AT1 with other existing, more reliable forms of capital.

Includes a graphic that depicts the minimum regulatory capital requirements and capital buffers into column graphs.

Banks are required to meet the capital conservation buffer (CCB), domestic systemically important bank (D-SIB) buffer, and the countercyclical capital buffer (CCyB) with Common Equity Tier 1 (CET1) Capital. These capital stacks exclude additional loss-absorbing capacity requirements.

Box 3 – Expected impacts from the proposals

Financial system – Greater confidence and certainty in crisis response

Banks – Simple and proportional implementation

Investors – Orderly adjustment, with no immediate impact on existing AT1