Working Group on Financial Resolution
The Financial Resolution Task Force is gathering academics, regulators and practitioners who are engaging in informal exchanges of views on bank resolution topics in order to promote dialogue and research in that area. It examines the full scope of relevant topics and highlights the current challenges in order to give impetus to innovative regulatory avenues and practical solutions. It also makes benefit of academic publications and ongoing research from practical experience and insights.
By engaging in such collaborative exercise, it is expected that the Task Force will make a contribution to the further development of appropriate regulation and processes which are crucial for more efficient and, to the extent possible, cost-neutral resolution of financial institutions in Europe and beyond.
Prof. Dr. Georg Ringe, Hamburg University, and Prof. Dr. Christos Gortsos, National and Kapodistrian University of Athens, are the academic co-leaders of this Task Force.
Prof. Dr. Georg Ringe
Prof. Dr. Christos Gortsos
A. Compilation of databases – exchange of information
- Compile a list of topics relating to the resolution of banks and other categories of financial firms (“Financial Resolution”), which are of interest to EBI academic, advisory and supporting members and which merit further research.
- Facilitate the dissemination of draft working papers or contribute raw information and other early stage research among interested EBI members on individual topics relating to Financial Resolution with a view to gathering relevant data, sharing views, engaging in constructive debate and developing ideas. Conference calls may be organised to facilitate this exchange of information.
B. Promotion of research
Encourage EBI academic members and other scholars with an interest in Financial Resolution to lead research in the individual topics identified with a view to producing working papers for the EBI Working Paper Series and/or other publishing outlets.
C. Internal cooperation
Schedule a conference call, at least three times per year, in order to report to the members of the Financial Resolution Task Force on its work, including its research priorities and research outputs and facilitate the updating of the list of topics relating to Financial Resolution.
D. Cooperation with EU agencies and international fora
- Establish a permanent cooperation with the Single Resolution Board (SRB) in order to discuss issues of common interest in the field of Financial Resolution in the European Union (EU) and submit research papers produced by the EBI academic members and other scholars specialised in the field of Financial Resolution. Organise an Annual Conference with the SRB on relevant issues open to a wider audience.
- Establish a permanent cooperation with the European Banking Authority (EBA) and the European Central Bank (ECB) (and potentially the European Insurance and Occupational Pensions Authority (EIOPA)) in order to discuss regulatory issues in the field of Financial Resolution in the EU.
- Establish a cooperation with the Financial Stability Board (FSB) in order to discuss international regulatory developments in the field of Financial Resolution and their impact on the relevant EU regulatory framework.
- Sustain a dialogue with these institutions about which data (either non-confidential or anonymised) could be made available for research purposes.
E. Broader dissemination of work – organisation of events
- Encourage the organisation of workshops, seminars, and conferences to present the research produced to a wider audience.
- Organise a panel at the EBI Annual Conference on a Financial Resolution topic.
- Preparation for resolution: resolution planning – impediments to resolution – MREL/TLAC
- Resolution planning
- Impediments to resolution: scope, coherence between individual institutions, treatment of retail holders
- The upcoming MREL/TLAC framework
- The calibration of the MREL in the context of the implementation of BRRD2 (in particular the related criteria, the scenarios and the related uncertainty, the degree of discretion based on a case by case appreciation including additional bank-specific aspects which may lead to an (even) more tailormade MREL)
- The quantitative assessment of the value of the risk premia in MREL issuances due to the complexity of the regulatory framework: a pricing model approach
- The more difficult access to public debt market for banks with business models that rely on deposit funding and the analysis of proportionality measures introduced by BRRD 2 (eg. with regard to subordination requirements)
- The impact of resolution strategies based on the Sale of Business or Bridge Institution tools on the MREL calibration
- A comparative approach (eg. EU/US/Japan/China) of the TLAC implementation and the related questions of regulatory arbitrage, based on the work conducted by the FSB
- Moratorium tools and associated benefits and risks
- Granular study of third-country recognition (e.g. on resolution planning, in terms of operationalisation of bail-in)
- Early intervention measures – obstacles to apply them and potential solutions
- Valuation: in particular EBA RTSs on valuation before and after resolution, EBA Valuation Handbook and SRB valuation framework and resolution process (due to independent valuers)
- Critical functions
- Continued access to financial market infrastructures (FMIs) for entities ahead of and during resolution as a prerequisite for the continuity of critical functions and the role of the SRB and of the FMIs in this respect
- The concept of ‘operational continuity’ during the resolution phase
- Analysis of the UK mechanism of ‘capabilities’ appreciation’ through a system of quick data reporting
- Aspects relating to resolution actions and resolution tools
- Bank resolution and systemic risk
- The application of resolution measures in case of a systematic (as opposed to a purely idiosyncratic) crisis
- Bank securities and their counterparties, pro-cyclical effects of bail-in
- The public interest criterion
- The public interest assessment by resolution authorities (PIA)
- The liability of EU and national resolution and supervisory authorities in the decision-making process: theory, legal bases and lessons from jurisprudence
- The relevance of the resolution plans
- Intra-EU cross border resolution, in particular the case of holding companies
- Bank resolution and systemic risk
- Institutional aspects
- EU Single Rulebook on resolution: the role of the EBA and of the other EU institutions and bodies
- Institutional aspects related to resolution in the Banking Union:
- Balance of powers between the SRB and the SSM
- The grey zone (e.g. in situations of precautionary recapitalisation)
- The responsibilities of the SSM in resolution planning and implementation
- The role of the EBA in resolution planning and implementation, in particular having regard to relationship between Banking Union and non-Banking Union Member States: resolution colleges oversight, mediation, etc.
- The exchange of information between supervisory and resolution authorities
- The cooperation between the SRB and national resolution authorities within the SRM
- The investigatory powers and the sanctions regime of the SRB
- The role of the Appeal Panel: lessons from the first years of its operation
- The transparency of the activities undertaken by the SRB
- Liquidity risk and funding sources for banksin resolution – The role of the ECB, the ESM and national central banks regarding the provisioning of liquidity and the stabilisation after the resolution weekend
*Work in Progress*