The Financial Stability Board (FSB) has issued its final standard that sets Total Loss-Absorbing Capacity (TLAC) requirements for global banks, the Basel-based regulator announced on Monday.

The new TLAC requirements aim to ensure that the world’s biggest, most important banks have “sufficient loss-absorbing and recapitalization capacity” to allow for an orderly resolution if they were to fail. The measure aims to further guard against taxpayer bailouts, in the wake of the financial crisis.

G-SIBs will be required to meet a minimum TLAC requirement of at least 16% of risk-weighted assets, as of January 2019, and at least 18% as of Jan. 1, 2022. The TLAC minimum must also be at least 6% of the Basel III leverage ratio in 2019, and at least 6.75% in 2022. Banks based in emerging market economies will have longer to meet the new standards (they will have until 2025 and 2028, respectively). The TLAC requirements are in addition to the minimum capital requirements set out in the Basel III framework.

The FSB and global banking regulators estimate that the minimum TLAC requirements will translate into increases in lending rates for the average borrower that range from 2.2 to 3.2 basis points; and, the median long-run annual output costs are estimated at 2 to 2.8 basis points of GDP. At the same time, the estimated benefits of TLAC, due to the reduced likelihood and cost of crises, comes in at between 15 and 20 basis points of annual GDP.

“The FSB has agreed a robust global standard so that G-SIBs can fail without placing the rest of the financial system or public funds at risk of loss,” Mark Carney, chairman of the FSB, said in a statement. “This new standard, which will be implemented in all FSB jurisdictions, is an essential element for ending too-big-to-fail for banks. The economic impact assessments conducted as part of the detailed policy work shows that the economic benefits of the final standard far outweigh the costs.”

The new TLAC standard establishes a minimum requirement for the instruments and liabilities that should be readily available at G-SIBs that are facing resolution. So far, none of the big Canadian banks have been defined as G-SIBs. The standard does not limit authorities’ powers to expose other liabilities to losses through the use bail-ins of other resolution tools, the FSB says.