The funding of bank resolution in Europe: will the new framework meet expectations?
Finance and Financial Regulation
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The Bank Recovery and Resolution Directive (BRRD) and the associated Single Resolution Regulation (SRR) put emphasis on the financing of a resolution coming from the private sector and those that have knowingly taken on the risks rather than on the taxpayer through a bail out. However, as David G. Mayes argues, simply being able to resolve a bank without a taxpayer bail-out does not necessarily reduce the economic cost of the resolution, since a failure of a systemic bank can impact GDP, unemployment and hence tax revenues and welfare expenditures.
In his presentation, David G. Mayes will explore the problems of assessing the costs of resolving failing banks and explain the New Zealand scheme and the authorities’ assessment of the impact the various resolution and recovery measures is likely to have on the economy. He then assesses the proposals in the BRRD/SRR in this light and finally draws conclusions for the ways in which the BRRD/SRR might be implemented in order to keep the risks to society at large to a minimum. He argues that the strong preference for bailing-in rather than bailing-out will only work if the scheme can offer certainty that bailing-in will be applied. However, the complexities of cross-border resolution may make the EU’s bail-in scheme less credible and thereby banks may still expect a bail-out.
David G. Mayes’ presentation will be followed by comments from Robert Kendrick and Emiliano Tornese, and then a general discussion chaired by Zsolt Darvas.
- David G. Mayes, Director and Professor of the Europe Institute at the University of Auckland
- Robert Kendrick, Credit Analyst at Schroders plc, Research Division.
- Emiliano Tornese, Banking and Securities Lawyer at European Commission
- Zsolt Darvas, Senior Fellow at Bruegel
Presentation by David Mayes –
- Venue: Bruegel, Rue de la Charité 33, 1210 Brussels
- Time: 16th December 2014,12.45- 14.30. Lunch will be served at 12.45 after which the event begins at 13.00.
- Contact: Matilda Sevón, Events Manager [email protected]