Yesterday, the Bank for International Settlements announced that its member jurisdictions have made significant progress in implementing the final elements of Basel III.

Basel III includes wide acceptance of bail-in as a way of rescuing failing banks. Unlike a bailout, which involves external assistance (often from taxpayers), a bail-in restructures the bank’s liabilities internally which includes taking the money you have on deposit and in savings accounts, as these form part of the bank’s liabilities, and converting them from cash you can use into something else, e.g. shares in the bank.

In other words, it is a bailout by the taxpayers but without the government as the middleman. As a depositor or saver, the bail-in conditions will not be negotiated with you.