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Crisis management and bank resolution: Quo vadis, Europe?

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  • Attinger, Barbara Jeanne

Abstract

Crisis management in the financial sector is currently at the top of the reform agenda at national, European and international level. Well-designed bank resolution regimes are essential not only to meet the acute need of a credit institution in crisis but also to ensure that proper incentive structures operate in the market prior to any crisis. Existing regimes are inadequate and incentive structures have proven to be fundamentally destructive. The lack of workable crisis resolution tools has had an adverse effect on crisis prevention and imposed enormous costs on the taxpayer. Effective crisis management demands the ability to manage. In the aftermath of the financial crisis, two leading EU Member States (the United Kingdom and Germany) adopted special resolution regimes, providing for tools and powers to manage the resolution of banks. The paper assesses and compares these two approaches. In addition, the paper analyses the emerging response at European and international level, focusing in particular on bail-ins, the suspension of netting and other rights, treatment of groups and systemically important financial institutions. At the international level, the Financial Stability Board's recently published JEL Classification: K

Suggested Citation

  • Attinger, Barbara Jeanne, 2011. "Crisis management and bank resolution: Quo vadis, Europe?," Legal Working Paper Series 13, European Central Bank.
    • Handle: RePEc:ecb:ecblwp:201113
    Note: 1766300
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    File URL: https://www.ecb.europa.eu//pub/pdf/scplps/ecblwp13.pdf
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    References listed on IDEAS

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    1. Brierley, Peter, 2009. "Financial Stability Paper No 5: The UK Special Resolution Regime for Failing Banks in an International Context," Bank of England Financial Stability Papers 5, Bank of England.
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    Cited by:

    1. A. Michael Andrews, 2014. "Effective resolution regimes for financial institutions in ASEAN+3," Chapters, in: Iwan J. Azis & Hyun S. Shin (ed.), Global Shock, Risks, and Asian Financial Reform, chapter 12, pages 464-509, Edward Elgar Publishing.
    2. Andreas Dombret & André Ebner, 2013. "Default of Systemically Important Financial Intermediaries: Short-term Stability versus Incentive Compatibility?," German Economic Review, Verein für Socialpolitik, vol. 14(1), pages 15-30, February.
    3. ap Gwilym, Rhys & Kanas, Angelos & Molyneux, Philip, 2013. "U.S. prompt corrective action and bank risk," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 239-257.
    4. Rudolph, Bernd, 2014. "Bankregulierung zur Lösung des „too big to fail“-Problems," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 68(2), pages 72-91.

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