Bank Resolution Plans as a Catalyst for Global Financial Reform

Journal of Financial Stability, Vol. 9, pp. 210-218, 2013

Duisenberg School of Finance Policy Paper No. 4

21 Pages Posted: 10 Jan 2010 Last revised: 8 May 2013

See all articles by Emilios Avgouleas

Emilios Avgouleas

University of Edinburgh - School of Law

Charles Goodhart

London School of Economics & Political Science (LSE) - Financial Markets Group

Dirk Schoenmaker

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM); Centre for Economic Policy Research (CEPR)

Date Written: May 1, 2010

Abstract

Bank Resolution Plans (Living Wills) should help with the resolution of systemically important financial institutions (SIFIs) in distress. They should be used to clarify and simplify the legal structure and make it commensurate with the functional business lines of the institution. Living Wills could also prove the right regulatory instrument to achieve two further innovations in the resolution of SIFIs with crossborder presence. First, they could incorporate burden sharing arrangements between countries enabling burden sharing on an institution by institution basis. However, there would remain problems arising from the incompatibility of the laws governing cross-border bank insolvencies. Many countries are currently introducing special laws covering the resolution of SIFIs. This creates a window of opportunity to use Living Wills to introduce a second innovation: a consistent legal regime for the resolution of SIFIs across the G20 countries.

Keywords: banks, too-big-to-fail, burden sharing, bank insolvency procedures

JEL Classification: G21, G28, G33

Suggested Citation

Avgouleas, Emilios and Goodhart, Charles A.E. and Schoenmaker, Dirk, Bank Resolution Plans as a Catalyst for Global Financial Reform (May 1, 2010). Journal of Financial Stability, Vol. 9, pp. 210-218, 2013, Duisenberg School of Finance Policy Paper No. 4, Available at SSRN: https://ssrn.com/abstract=1533808 or http://dx.doi.org/10.2139/ssrn.1533808

Emilios Avgouleas

University of Edinburgh - School of Law ( email )

Old College
South Bridge
Edinburgh, EH8 9YL
United Kingdom

Charles A.E. Goodhart

London School of Economics & Political Science (LSE) - Financial Markets Group ( email )

Houghton Street
London WC2A 2AE
United Kingdom
0207 955 7555 (Phone)
0207 242 1006 (Fax)

Dirk Schoenmaker (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.rsm.nl/people/dirk-schoenmaker/

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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