To mitigate the systemic risk posed by institutions considered “too big to fail,” macroprudential authorities enforce mandatory Capital Surcharges on Global Systemically Important Banks (G-SIBs).

Regulators identify G-SIBs using a multi-variable scoring framework managed by the Basel Committee:

G-SIB Score = Size + Interconnectedness + Substitutability + Global Cross-Jurisdiction + Complexity

Banks that cross critical systemic thresholds are assigned to specific risk buckets and hit with mandatory capital surcharges (an additional 1.0% to 3.5% of Common Equity Tier 1 capital). This requirement forces systemically important banks to hold larger capital buffers, pricing the cost of systemic risk directly into their operations and encouraging them to reduce their structural complexity.