bail-in

A bail-in is a process where a failing bank's own creditors and depositors absorb some of the losses, rather than relying on taxpayer money or government rescue. Instead of rescuing the bank with public funds, the bank reduces its debt or converts debt into equity, helping stabilize its finances. This approach aims to protect the broader financial system and prevent a taxpayer-funded bailout, while sharing the financial burden more evenly among investors, creditors, and sometimes larger depositors. Bail-ins are part of modern financial regulations to manage bank failures responsibly.