Bail-ins and Bank Resolution in Europe
Bail-ins and Bank Resolution in Europe reviews provides a critical comparison of the US and EU bank resolution rules, including the underlying similarities, differences, and enhancement points of both frameworks. It then goes on to focus on European banking failures, providing estimates of taxpayer costs and considering the hypothetical application of stronger private sector bail-in consistent with the spirit of the Bank Resolution and Recovery Directive. The report ends with a number of policy recommendations concerning governance, stress testing, cross-border issues, and resolution of financial contracts.
This book is the 4th Special Report in the Geneva Reports on the World Economy series that reviews the current status of bail-ins and bank resolutions in Europe.
Drawing together the expertise of its Research Fellows and Affiliates, CEPR initiates, funds and coordinates Research activities and communicates the results quickly and effectively to decision makers around the world.
Table of Contents
Executive Summary
Introduction
Literature Review
Part 1: Overview of the US and EU frameworks
US Resolution Framework
EU Resolution Framework
Comparison and Discussion
Part 2: Evidence and Case Studies
Some Evidence on the Impact of 'Living Wills'
Case Studies of Some European Banks
Overview of Banks Considered
Summary of the Case Studies
Cyprus: Bain-in and Capital Controls
Part 3: Challenges and Recommendations
Establishing Credibility: Common Good, Private Cost
The Need to Monitor Who Holds Bail-Inable Instruments
Design of Stress Tests
Harmonisation and Predictability of Insolvency and Collateral Security Laws
Timing and Coordination
Living Wills and Liquidity
Cross-Border Resolution and the Choice Between SPE and MPE
Derivatives, Short-Term Liabilities and Safe Harbour
Reduced Discretion of the Bail-In Rules
Creation of a Privilege of New Money
Conclusion
References