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Effective resolution of banks: Problems and solutions

Author

Listed:
  • Franke, Günter
  • Krahnen, Jan Pieter
  • von Lüpke, Thomas

Abstract

This essay reviews a cornerstone of the European Banking Union project, the resolution of systemically important banks. The focus is on the inherent conflict between a possible intervention by resolution authorities, conditional on a crisis situation, and effective prevention prior to a crisis. Moreover, the paper discusses the rules for bail-in debt and conversion rules for different layers of debt. Finally, some organizational requirements to achieve effective resolution results will be analyzed.

Suggested Citation

  • Franke, Günter & Krahnen, Jan Pieter & von Lüpke, Thomas, 2014. "Effective resolution of banks: Problems and solutions," SAFE White Paper Series 19, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safewh:19
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    File URL: https://www.econstor.eu/bitstream/10419/102027/1/796624771.pdf
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    References listed on IDEAS

    as
    1. Andrei Shleifer & Robert Vishny, 2011. "Fire Sales in Finance and Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 29-48, Winter.
    2. Binder Jens-Hinrich, 2013. "Auf dem Weg zu einer europäischen Bankenunion? Erreichtes, Unerreichtes, offene Fragen," Zeitschrift für Bankrecht und Bankwirtschaft (ZBB) / Journal of Banking Law and Banking (JBB), RWS Verlag, vol. 25(5), pages 297-312, October.
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    Cited by:

    1. Huertas, Thomas F., 2021. "Reset required: The euro area crisis management and deposit insurance framework," SAFE White Paper Series 85, Leibniz Institute for Financial Research SAFE.
    2. Huertas, Thomas F., 2020. "Plug the gap: Make resolution ready for corona," SAFE White Paper Series 73, Leibniz Institute for Financial Research SAFE.

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    More about this item

    Keywords

    Bank Recovery and Resolution Directive (BRRD); Single Resolution Mechanism (SRM); Bail-in;
    All these keywords.

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