ECB Touts German Bond Bill as Blueprint for FSB’s TLAC

The European Central Bank said a German draft law that puts senior creditors in line for losses when lenders fail shows the way for other European Union countries to comply with new global rules designed to prevent bailouts.

The bill would facilitate German banks’ implementation of the Financial Stability Board’s proposed rules on total loss-absorbing capacity, or TLAC, ECB Executive Board Member Sabine Lautenschlaeger wrote in a statement to German lawmakers who are considering the legislation. This would put euro-area banks on a more equal footing with those in the U.S. and U.K.