- border. the convergence at international level on bail - in as the appropriate strategy for large banks is itself significant. this transcends whether firms are single point of entry or multiple point of entry. and whether the bail - in is effected by use of a bail - in tool in an operating bank or by application of a bridge bank tool at holding company level. it represents the realisations that if we are to end tbtf we must have bail - ins instead of bail - outs so losses can fall on investors not on taxpayers. and that the bail - in must enable continuity in a firm ’ s operations to avoid interruption to critical functions and to buy time for an orderly reorganisation of the firm to the extent necessary to deal with the problem that first caused the failure. this shared understanding at fsb, and the desire to meet the goal set by g20 leaders to end tbtf and the risk of taxpayer bail - outs as soon as possible, has driven a focus on seeking changes at firms so that they can be stabilised and enter resolution safely without disruption to critical functions. hence the focus on two dimensions : - loss absorbency : firms need tlac in the right amount ( enough not only to absorb losses but to provide for recapitalisation so firms can continue to meet requirements for authorisation ) ; in the right form ( debt with residual maturity of a year and subordinated to operating liabilities to avoid breaches of the ‘ no creditor worse off than insolvency ’ ( ncwo ) safeguard or other challenges to the bail - in and at the same time to provide clarity to depositors that they are not likely to be bailed in ) ; and in the right location ( ensuring that resources are positioned within a group so that the key operating companies containing a firm ’ s critical functions can be recapitalised all speeches are available online at www. bankofengland. co. uk / speeches immediately in resolution ). as such, international agreement of the fsb ’ s tlac standard in 2015 represented a major milestone in moving towards ending tbtf. - continuity of critical functions : the second main dimension of stabilisation is to ensure continuity in a firm ’ s operations in resolution. part of this is legal – changing contractual arrangements so that entry into resolution does not result in widespread, disorderly termination, close - out or acceleration in financial contracts, provision of services or access to financial market infrastructures ( fmis ). it is

, as i will discuss in a moment, but critically, fears of financial collapse have lessened substantially. most important, the economy has stabilized and is growing again, although we can hardly be satisfied when 1 out of every 10 u. s. workers is unemployed and family finances remain under great stress. toward better financial regulation and supervision as i noted earlier, we found some of the choices that we faced during the financial crisis exceedingly distasteful. the federal reserve has always recognized the importance of allowing markets to work, and government oversight of financial firms will never be fully effective without the aid of strong market discipline. the decisions we took, in collaboration with the treasury, to assist distressed firms during the height of the crisis thus ran strongly against the grain of our institution. however, as i said, our options under extremely difficult circumstances were bad and worse, as our ability to respond effectively was sharply limited by the lack of tools available to act in a crisis. in particular, the u. s. government lacked any workable means to address the potential disorderly failure of a large, systemically important firm in a way that protected the economy and taxpayers from severe collateral damage. with the crisis largely behind us, we as a country must now turn to fixing structural weaknesses in the financial system, in particular in the regulatory framework. we need tough new rules to make financial institutions safer and to constrain excessive risk - taking, and we need a regulatory framework that gives the federal reserve and other agencies the ability to address risks to the financial system as a whole. critically, so that we will never again face the unpalatable choice between bailouts and a disorderly bankruptcy that threatens to bring down our financial system, we must bring an end to the belief that some financial institutions are too big to fail. to do that, we urgently need a new resolution regime for large, complex, and interconnected financial firms, similar to that already established for banks. to end toobig - to - fail, the new regime should permit regulators to close a failing firm and impose losses on shareholders and creditors ; indeed, i would argue that no financial instrument counted as regulatory capital should be allowed to receive any protection from losses. at the same time, regulators must have the tools necessary to minimize the associated disruption to the financial system and the broader economy. 3 see board of governors of the federal reserve system ( 2009 ), “ federal reserve, occ, and fdic release results of the supervisory capital assessment