A lesson from the 2023 bank failures
After the 2023 bank failures showed how quickly a lender can run short of cash, the Financial Stability Board examined whether authorities could supply temporary funding during resolution—the process for dealing with a failing bank while preserving its critical functions. Its October 9 report focuses on a public backstop used only when private resources and other funding sources are insufficient. [1][2]
The findings reflect information as of August 2026. The review found uneven implementation of the funding standard the FSB adopted in 2011: about one in five member jurisdictions fully complied, while about half had material gaps. Fewer than half had backstops that were clear, could supply funding at the necessary scale and could be used quickly enough. [2]
Preparation before a crisis
The review examines three things: whether temporary can arrive at the required speed and scale, whether any taxpayer losses can be recovered, and whether safeguards keep public funding a last resort rather than an incentive for excessive risk-taking. These are funding arrangements for resolution, not a review of every jurisdiction’s overall ability to handle a financial crisis. [3][1]
The FSB issued six recommendations for jurisdictions and called for arrangements to be prepared before a crisis rather than improvised during one. It also recommended sharing practical experience and monitoring implementation. [1]