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Taking stock of the Single Resolution Board: Banking union scrutiny

The Single Resolution Board (SRB) has had a somewhat difficult start but has been able to learn and adapt, and has gained stature following its first bank resolution decisions in 2017-18. It must continue to build up its capabilities, even as the European Union’s banking union and its policy regime for unviable banks continue to develop.

By: Date: April 18, 2019 Topic: European Macroeconomics & Governance

This material was originally published in a paper provided at the request of the Committee on Economic and Monetary Affairs of the European Parliament and commissioned by the Directorate-General for Internal Policies of the Union and supervised by its Economic Governance Support Unit (EGOV). The opinions expressed in this document are the sole responsibility of the authors and do not necessarily represent the official position of the European Parliament. The original paper is available on the European Parliament’s webpage (here). © European Union, 2019

The Single Resolution Board (SRB) was established as a key component of the European banking union initiated in mid-2012 at the height of the euro area crisis. It has had a somewhat delayed and difficult start, largely explained by competing objectives in the legislation that established it. But it has now plausibly passed many of its first few tests, and has displayed an encouraging propensity to learn and adapt. Further efforts are needed to reach a satisfactory steady state in the next few years, assuming no major crisis in the meantime. This study identifies three areas that might justify specific scrutiny:

  • First, and in accordance with its founding legislation, the SRB needs to build an autonomous ability to determine if a bank is failing or likely to fail, while avoiding unnecessary duplication of resources or processes with the Single Supervisory Mechanism. This might be supported as necessary by onsite inspections, which the SRB has the authority to conduct but for which it has not yet established its capability.
  • Second, the SRB should take a multi-dimensional approach to crisis preparedness, beyond pursuing its core task of resolution planning. In particular, it should ensure it will be able to concretely draw on the skills and experience needed when confronted with the highly challenging tasks that may come with a major crisis.
  • Third, and with a medium-term time horizon in mind, legislators should consider reforming the SRB’s governance framework so as to establish it further as an authoritative, operationally independent decision-making entity.
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Opinion

China's dual banking system: consolidation as the final solution for weak small banks

There are fundamental solvency and liquidity issues for some small Chinese banks, widely influencing both the bond market as well as the broader financial sector. Given the difficulties in creating a level playing field between small and large banks, there is an expectation that small banks will continue to under-perform.

By: Alicia García-Herrero and Gary Ng Topic: Finance & Financial Regulation Date: September 16, 2019
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By: Alicia García-Herrero Topic: Global Economics & Governance Date: September 13, 2019
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Upcoming Event

Oct
29
08:30

Bank resolution: its impact in the EU

Closed-door workshop on various aspects of bank resolution.

Speakers: Jon Cunliffe, Martin J. Gruenberg and Elke König Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels
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Podcast

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By: The Sound of Economics Topic: Finance & Financial Regulation Date: September 5, 2019
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External Publication

An Effective Regime for Non-viable Banks: US Experience and Considerations for EU Reform

The US regime for non-viable banks has maintained a high degree of stability and public confidence by protecting deposits, while working to minimise the public cost of that protection. EU reformers can draw valuable insights from the US experience. A review of the US regime supports arguments in favour of harmonisation and centralisation of bank insolvency proceedings and deposit insurance in Europe’s banking union.

By: Anna Gelpern and Nicolas Véron Topic: Finance & Financial Regulation Date: July 22, 2019
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By: Alexander Lehmann Topic: European Macroeconomics & Governance Date: July 18, 2019
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By: Rebecca Christie Topic: Finance & Financial Regulation Date: July 10, 2019
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By: The Sound of Economics Topic: European Macroeconomics & Governance Date: July 4, 2019
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By: Konstantinos Efstathiou Topic: Finance & Financial Regulation Date: July 1, 2019
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Past Event

Past Event

Sound at last? Assessing a decade of financial regulation

What has changed since the financial crisis of 2008 that makes the financial system sound at last? Is regulatory reform going in the right direction? Has it run its course? 

Speakers: Patrick Bolton, Rebecca Christie, Maria Demertzis, Mathias Dewatripont and Xavier Vives Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 20, 2019
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