another option is for g - sibs to issue glac - eligible instruments from a holding company and downstream the proceeds ( often referred to as “ structural subordination ” ). another option that has been suggested is either to prefer excluded liabilities or subordinate eligible liabilities in statute – although agreeing changes to national insolvency laws could prove challenging. again, whatever the approach, adequate disclosure at the legal entity level will be crucial to allow creditors to identify easily their position in the creditor hierarchy. with such adequate disclosure, there is no a priori reason why the cost of meeting such a requirement would differ between the approaches. a final, crucial, aspect in rationalising g - sibs ’ liability structures to make them resolvable is to ensure that the loss - absorbing capacity is issued from the right place in the group. g - sibs have hundreds, sometimes thousands, of legal entities. applying resolution tools to each one is not possible. therefore the resolution strategy for each g - sib will involve resolving either the whole group, or parts of the group, by applying resolution tools to a single parent, or a small number of intermediate parent entities – or, in fsb parlance, resolution entities which serve as the point or points of entry to resolution. there must be mechanisms in place to ensure that key operating subsidiaries of each resolution entity have reliable access to the glac issued by the resolution entity. one way of achieving this is for the resolution entity to downstream the resources raised by external issuance of glac - eligible instruments to material subsidiaries as long - term debt that ranks junior to the subsidiaries ’ non - capital instruments. this pre - positioned intragroup glac could contain provisions that allow the losses to flow up to the resolution entity by converting the intragroup debt to equity without placing the subsidiary into resolution, if home and host authorities agree this is necessary. since, in a cross - border resolution of a g - sib, it is in the interests of both home and host resolution authorities that key subsidiaries that are not themselves resolution entities do not formally enter resolution, and instead resolution tools are applied only to resolution entities, this will incentivise cooperation between home and host and reduce incentives to ringfence assets locally in an uncooperative manner. so, if there is sufficient glac of adequate quality that is distributed appropriately within g - sib groups, we will have made a further, major step in making g - sibs

– had all come under pressure from a number of directions. first, as a consequence of the global liquidity squeeze, indian corporates found their overseas financing drying up, forcing corporates to shift their credit demand to the domestic banking sector. also, in their search for substitute financing, corporates withdrew their investments in domestic money market mutual funds ( mfs ) ; consequently, non - banking financial companies ( nbfcs ) where the mfs had invested a significant portion of their funds came under redemption pressure. this substitution of overseas financing by domestic financing brought both money markets and credit markets under pressure. second, the forex market came under pressure because of reversal of capital flows as part of the global deleveraging process. simultaneously, corporates were converting the funds raised locally into foreign currency to meet their external obligations. both these factors put downward pressure on the rupee. third, the reserve bank's intervention in the forex market to manage the volatility in the rupee further added to liquidity tightening. now let me turn to the real channel. here, the transmission of the global cues to the domestic economy has been quite straight forward – through the slump in demand for exports. the united states, european union and the middle east, which account for three quarters of india's goods and services trade, are in a synchronized down turn. services export growth is also likely to slow in the near term as the recession deepens and financial services firms – traditionally large users of outsourcing services – are restructured. remittances from migrant workers too are likely to slow as the middle east adjusts to lower crude prices and advanced economies go into a recession. beyond the financial and real channels of transmission as above, the crisis also spread through the confidence channel. in sharp contrast to global financial markets, which went into a seizure on account of a crisis of confidence, indian financial markets continued to function in an orderly manner. furthermore, our banks have continued to lend. however, the tightened global liquidity situation in the period immediately following the lehman failure in mid - september 2008, coming as it did on top of a turn in the credit cycle, increased the risk aversion of the financial system and made some banks cautious about lending. the purport of the above explanation is to show how, despite not being part of the global financial sector problem, india has been affected by the crisis through the adverse feedback loops between external shocks and domestic vulnerabilities. how have