When a bank is threatened with insolvency, it also becomes illiquid as creditors flee. When a systemic bank becomes insolvent, the critical services it provides must be maintained even while the bank as a whole is wound up. That means restoring liquidity. This is a problem regulators of global systemically important banks (G-Sibs) have grappled with ever since the 2008 financial crisis.
In the US, the Dodd-Frank Act’s response to this concern was its Title II, which established a regulatory pro