Definition for : Bail-in

The bail-in grants the prudential control authorities of financial institutions the power to force certain creditors of a lending establishment that has Solvency problems, to convert their debts into shares in this establishment and/or to reduce the amount of these debts. Accordingly, it is a tool that can be used to limit the possible recourse to public funds by an establishment in difficulty that is still operating or that is in the process of being liquidated. The bail-in can help to solve problems of Solvency but not of liquidity.

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