Micossi, S. (2014) “Bail-in rules in EU banking union and financial stability“, VoxEU Organisation, 05 Ιουνίου.
The European banking union is in pressing need of a unified banking resolution mechanism, but public bail-in has become increasingly unpopular. This column details new legislation towards a single resolution mechanism in the EU that minimises public exposure. The shareholders of an insolvent bank will be the first to take the hit, followed by creditors, before the public. This has the advantage also of mitigating moral hazard.
The Council and the European Parliament have adopted a directive (BRRD)1 and a regulation (SRR)2 establishing uniform rules for bank resolution in the EU. These include rules for the bail-in of shareholders and creditors when a bank is in need of public support.
The pre-conditions and scope of burden-sharing by creditors under state aid control and resolution procedures do not coincide. Moreover, questions have been raised as to whether the guidelines on state aid to banks take sufficient account of systemic stability considerations when imposing the conversion or write-down of creditor claims.3
Σχετικές αναρτήσεις:
- Greene, M. (2014) “The Eurozone’s Imperfect Banking Union“, Open Markets, 20 Φεβρουαρίου.
- Acharya V., and Steffen S. (2014) “Falling short of expectations? Stress-testing the European banking system“, VoxEU Organisation, 17 Ιανουαρίου.
- Ubide, A. (2013) “How to form a more perfect European Banking Union“, Peterson Institute for International Economics, Policy Brief, PB13-23, Οκτώβριος.