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Bail-in's unfulfilled promise

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  • Hadjiemmanuil, Christos

Abstract

The adoption of bail-in by the EU and other jurisdictions as the core tool of their bank resolution regimes promised to ensure the effective financial restructuring of failed banks with the resources of their own stakeholders, thereby achieving the financial stability objectives of resolution while making taxpayer-funded bailouts a thing of the past. In retrospect, despite its many positive effects, it is questionable whether bail-in has fully lived up to its promise. The operationalisation of the bail-in tool is still ongoing, with several legal and practical issues yet to be fully resolved. Furthermore, the tool’s actual use in resolution actions has so far been sporadic and uneven, undermining its credibility; in any event, significant doubts remain as to the appropriateness of bail-in in situations of system-wide distress.

Suggested Citation

  • Hadjiemmanuil, Christos, 2025. "Bail-in's unfulfilled promise," LSE Research Online Documents on Economics 127284, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:127284
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    More about this item

    Keywords

    BRRD; bail-in; bailout; bank resolution; FSB; key attributes;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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