Bank Resolution in Europe: the Unfinished Agenda of Structural Reform

Bank Resolution in Europe: the Unfinished Agenda of Structural Reform

Jeffrey Gordon, Wolf-Georg Ringe

Series number :

Serial Number: 

Date posted :

January 01 2015

Last revised :

February 08 2015
SSRN Share


  • Bank resolution • 
  • bank structural regulation • 
  • single point of entry • 
  • bank holding company

This chapter argues that the work of the European Banking Union remains incomplete in one important respect, the structural re-organization of large European financial firms that would make ?resolution? of a systemically important financial firm a credible alternative to bail-out or some other sort of taxpayer assistance.

A holding company structure in which the public parent holds unsecured term debt sufficient to cover losses at an operating financial subsidiary would facilitate a ?Single Point of Entry? resolution procedure that would minimize knock-on effects from the failure of a systemically important financial institution. Resolution through such a structure would minimize run risk from short term creditors and minimize destructive ring-fencing by national regulators. Although structural reform in the EU could be achieved by supervisory implementation of the ?living wills? requirement for effective resolution or irresistible incentives through capital charges, it would be best obtained through addition to the EU?s Proposed Structural Measures Regulation now under consideration.

Published in

Published in: 
Danny Busch & Guido Ferrarini (eds.), The European Banking Union (2015, Forthcoming)