ORCID
Anna Dobrzańska: 0000-0002-8243-9716
Keywords
bank resolution, Loss-Absorbing Capacity, recapitalisation, MREL, TLAC, simplification
Abstract
The current European Union (EU) framework for bank loss-absorbing capacity rests on two parallel requirements: Minimum Requirement for Own Funds and Eligible Liabilities (MREL) and Total Loss-Absorbing Capacity (TLAC). This creates complex and overlapping requirements. Furthermore, the adopted bank-specific approach to MREL calibration results in complexity, variability, and insufficient predictability of requirements. The aim of this article is to provide a new streamlined and simplified approach under the three-tiered Regulatory Resolution Requirement (RRR) which could replace the MREL/TLAC framework in the EU. The main idea behind the proposal is to adjust the requirement taking into account bank size and systemic impact. Accordingly, for the three bank categories already defined in the EU regulations, we propose a Regulatory Resolution Requirement, along with subordination requirement. RRR aims at simplification and clarification of bank loss absorption and recapitalisation requirement. Such a simplified approach would provide greater predictability and pose less of a regulatory burden while respecting the proportionality principle. The proposal fills a literature gap and aligns with ongoing EU policy discussions on simplification without compromising the restrictiveness of the current requirements.
Acknowledgments
All opinions expressed in this article belong to the author and do not represent the official stance of the institution in which she is employed.
Funding
The research received no funds.
Declaration of Conflicting Interests
The author declares no potential conflicts of interest with respect to the research, authorship and publication of the article.
Declaration about the scope of AI utilization
The author did not use an AI tool in the preparation of the article.
Recommended Citation
Dobrzańska, A. (2026). How to Simplify the MREL/TLAC Framework in the EU? A Proposal for a Regulatory Resolution Requirement. Journal of Banking and Financial Economics, 2026(1), 79-95. https://doi.org/10.7172/2353-6845.jbfe.2026.1.6
First Page
79
Last Page
95
Page Count
17
Received Date
07.01.2026
Revised Date
06.05.2026
Accept Date
23.06.2026
Online Available Date
16.07.2026
DOI
10.7172/2353-6845.jbfe.2026.1.6
JEL Code
G01,G21,G18, G28
Publisher
University of Warsaw
