From the start of 2016, new rules for bank resolution are in place – as spelled out in the Bank Recovery and Resolution Directive (BRRD) – across the EU, and a new authority (the Single Resolution Board, or SRB) is fully operational for resolving all banks in the eurozone.The implementation...

Making banks resolvable or “safe to fail” is a key component of the regulatory reform program enacted in response to the crisis. This paper designs a bank that will be resolvable, first for a bank in a single jurisdiction and then for a banking group with branches and/or subsidiaries in...

The EU's banking union aims to break the “doom loop” that makes governments dependent on banks and banks dependent on governments. However, current arrangements address only the first objective: the single supervisory mechanism should make banks less likely to fail. The single resolution...

1 Introduction The Financial Services Revolution -- I The History Of Banks And Bank Regulation -- 2 The Truth about Bank Runs -- 3 The Big Bust: The 1930-33 Banking Collapse—Its Causes, Its Lessons -- 4 Was the Establishment of a Canadian Central Bank in 1935 Necessary? -- 5 A Public Choice...

To complete banking union, there should be a single European deposit insurance scheme (EDIS) alongside the single supervisor and the single resolution authority. This would ensure uniformity across the Eurozone and facilitate the removal of barriers to the mobility of liquidity and capital...

Although bail-outs helped contain the financial crisis in 2008, making bail-outs the norm would undermine the public finances and sow the seeds for future crises. To prevent this, policymakers are reforming resolution at both the global and European level. This will assure that banks can fail...

In the economy expectations exercise enormous effects. Indeed, in finance prices and yields predominantly reflect current expectations about future cash flows and future interest rates. Change those expectations, prices and yields change as well. Change expectations radically enough, the change...

Banks cannot be made fail-safe. But they can be made safe to fail, so that the failure of a bank need not disrupt the economy at large nor pose cost to the taxpayer. In other words, banks can be made resolvable, and “too big to fail” can come to an end. To do so, the authorities, banks and...