ROBUSTNESS OF THE BANK RESOLUTION FRAMEWORK IN THE EUROPEAN UNION
Journal Title: Copernican Journal of Finance & Accounting - Year 2017, Vol 6, Issue 1
Abstract
The purpose of this article is to identify the key elements of resolution framework under the Single Resolution Mechanism (SRM) and to assess the robustness of the bank resolution framework in the European Union (EU). The 2007–2009 global financial crisis exposed number of weaknesses in the banking sector. It also showed the unpreparedness of the European governments in dealing with failing banks and the possible negative consequences it can have on the wider economy. As result, in order to save the economy from even deeper crisis, governments in many European countries had no other choice than to bail-out the “too-big-to-fail” banks using taxpayers’ money. Post-crisis, banking regulators recognised the need for a broader reform and creation of a formalized resolution framework which would allow for efficient resolution of troubled banks with no or limited use of public funds. The resolution proceedings are complex procedures, which need to balance the interest of the different bank stakeholders such as: shareholders, debt holders, regulatory and supervisory authorities, governments and many others. In the EU, the SRM was put in place together with Bank Recovery and Resolution Directive (BRRD) to address the issues identified during the crisis. This article is an attempt to demonstrate that the new European resolution framework contains provisions and tools that may limit the use of public funds in resolution of failing banks. The outcome provides a framework for further research focused on better understanding of the trade-offs in resolution framework and measuring the efficiency of bank resolution in the EU.
Authors and Affiliations
Jan Pys
Keywords
Related Articles
- EP ID EP192768
- DOI 10.12775/CJFA.2017.005
- Views 64
- Downloads 0
MATHEMATICAL MODEL FOR THE EVOLUTIONARY DYNAMIC OF INNOVATION IN CITY PUBLIC TRANSPORT SYSTEMS
In this study, a mathematical model is formulated and studied from the perspective of adaptive dynamics (evolutionary processes), in order to describe the interaction dynamics between two city public transport systems: o...
THE ROLE OF THE AMOUNT OF MONEY IN RISK-TAKING
Decisions based on the expected value have two components: the probability and the value or utility that is often expressed in money. Regarding the first element, it can be pointed out that many decisions contain risk co...
IMPLEMENTATION OF ALTERNATIVE INDEX WEIGHTING TO WARSAW STOCK EXCHANGE
Exchange Traded Funds are the fastest growing segment of investment management business. Over last eleven years ETF’s AUM grew over 2,000% This paper explores growing popularity of this investment vehicle and getting to...
MANAGING FINANCIAL STABILITY BY THE EUROPEAN CENTRAL BANK IN THE PERIOD 2008–2012
In reaction to the global financial crisis and ineffectiveness of traditional monetary policy, European Central Bank undertook a number of unconventional measures to preserve financial stability in the EU. The paper pres...
CONVERGENCE OF HEALTH EXPENDITURE IN EU 12 AND V4 STATES
The subject of this paper is an attempt to assess the level of convergence of government health spending in the European Union countries. The ever-increasing level of life expectancy, demographic changes, including the a...