Bank Resolution in Europe: The Unfinished Agenda of Structural Reform

Jeffery N. Gordon, Georg Ringe

Research output: Other contributionNet publication - Internet publicationCommunication

Abstract

Bank resolution is a key pillar of the European Banking Union. This column argues that the current structure of large EU banks is not conducive to an effective and unbiased resolution procedure. The authors would require systemically important banks to reorganise into a ‘holding company’ structure, where the parent company holds unsecured term debt sufficient to cover losses at its operating financial subsidiaries. This would facilitate a ‘single point of entry’ resolution procedure, minimising the risk of creditor runs and destructive ring-fencing by national regulators.
Bank resolution is a key pillar of the European Banking Union. This column argues that the current structure of large EU banks is not conducive to an effective and unbiased resolution procedure. The authors would require systemically important banks to reorganise into a ‘holding company’ structure, where the parent company holds unsecured term debt sufficient to cover losses at its operating financial subsidiaries. This would facilitate a ‘single point of entry’ resolution procedure, minimising the risk of creditor runs and destructive ring-fencing by national regulators.
LanguageEnglish
Date28 Jan 2015
StatePublished - 28 Jan 2015

Cite this

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Bank Resolution in Europe : The Unfinished Agenda of Structural Reform . / N. Gordon, Jeffery; Ringe, Georg.

2015, Blog.

Research output: Other contributionNet publication - Internet publicationCommunication

TY - ICOMM

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T2 - The Unfinished Agenda of Structural Reform

AU - N. Gordon,Jeffery

AU - Ringe,Georg

PY - 2015/1/28

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N2 - Bank resolution is a key pillar of the European Banking Union. This column argues that the current structure of large EU banks is not conducive to an effective and unbiased resolution procedure. The authors would require systemically important banks to reorganise into a ‘holding company’ structure, where the parent company holds unsecured term debt sufficient to cover losses at its operating financial subsidiaries. This would facilitate a ‘single point of entry’ resolution procedure, minimising the risk of creditor runs and destructive ring-fencing by national regulators.

AB - Bank resolution is a key pillar of the European Banking Union. This column argues that the current structure of large EU banks is not conducive to an effective and unbiased resolution procedure. The authors would require systemically important banks to reorganise into a ‘holding company’ structure, where the parent company holds unsecured term debt sufficient to cover losses at its operating financial subsidiaries. This would facilitate a ‘single point of entry’ resolution procedure, minimising the risk of creditor runs and destructive ring-fencing by national regulators.

UR - http://www.voxeu.org/article/restructure-eu-banks-facilitate-resolution

M3 - Net publication - Internet publication

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