Implementing Financial Sector Resolution

Among the many responses to the financial crisis, the most novel has been the insistence on creating resolution frameworks for the financial sector. Banks must now have detailed resolution plans readily available, and authorities are invested with the fullest powers to apply early intervention policies in the event that minimum capital requirements are not met, with the possibility to wipe out shareholders and bail-in debtors. For banking union (BU), this took the form of a new EU authority with the Single Resolution Mechanism (SRM). What has been agreed already for the banking sector is now on the table for insurance and market infrastructures. But resolution frameworks are still largely theoretical in character, and only a real crisis within a major financial institution, infrastructure or region will be able to test whether they effectively work.

CEPS proposes to form a Task Force to explore different issues in-depth and to systematically produce a series of policy recommendations, focusing on the implications of the resolution and recovery regime for EU banks and for European financial integration, its adaptation to insurers and CCPs, and the impact on capital markets. Members of the Task Force will discuss these matters over three meetings in the coming eight months.

Key topics to be discussed (provisional):

  • Operational structure of the single resolution mechanism (SRM) and the interaction with the national resolution authorities, within and outside the eurozone
  • Interaction and cooperation between the resolution authorities and prudential supervisors
  • Resolution authorities in action
  • Functioning of the bail-in of debtors
  • Interaction between the resolution mechanism and deposit insurance
  • Involvement of competition policy authorities in resolution procedures
  • Interaction with market-based contingency arrangements
  • Comparison of the resolution mechanism for banks and non-bank financial institutions and implications for policy and resolution tools. Can resolution of a bank and its position in a CCP be kept separate? Resolution tools across institutions and infrastructures.

Chairman:Thomas Huertas, Partner and Chair, EY Global Regulatory Network

Rapporteur: Karel Lannoo, CEO, CEPS

Click here to download the prospectus, with full information, including an application form.

CEPS is inviting senior representatives of banks and other financial institutions, infrastructures, government and associations as well as academics and other international experts to openly discuss the unresolved issues related to the EU’s resolution mechanism.

The meetings will be ‘off the record’ and will be held at CEPS’ premises in the centre of Brussels. We aim to attract a well-balanced group of about 25-30 persons.

Meetings:
1st meeting: 23 June 2015
2nd meeting: 25 September 2015
3rd meeting: 11 December 2015

More information:
For any questions contact Willem Pieter De Groen.