Crisis Management and Resolution for a European Banking System
99 Pages Posted: 29 Mar 2010
Date Written: March 2010
This paper proposes an integrated crisis management and resolution framework for the EU's single banking market. It comprises a European Resolution Authority (ERA), armed with the mandate and the tools to deal cost-effectively with failing systemic cross-border banks, and is designed to address many fundamental operational and incentive problems. It also seeks to reduce moral hazard and better protect countries against the risk of twin fiscal-financial crises by detaching banks from government budgets. The ERA would be most effective if it were twinned or combined with a European Deposit Insurance and Resolution Fund.
Keywords: Bank reforms, Bank resolution, Bank supervision, Banking crisis, Banking systems, Economic integration, European Monetary System, Financial crisis, Financial stability, Global Financial Crisis 2008-2009, Risk management
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