Banking Union: Towards new arrangements to finance banks under resolution?

04-07-2018

The recent case of Banco Popular has shown the importance of liquidity funding in the context of bank resolution. Ahead of the June Euro Summit, in a letter the President of the Euro group noted that in addition to the Single Resolution Fund (and its backstop) “work needs to continue on a possible framework for liquidity in resolution, including on the possible institutional framework”. This briefing (1) describes the existing arrangements in the Banking Union, (2) compares those arrangements with the US and the UK regimes and (3) echoes ongoing reflections on possible new arrangements along the lines of the US and UK regimes, with a view to completing the Banking Union.

The recent case of Banco Popular has shown the importance of liquidity funding in the context of bank resolution. Ahead of the June Euro Summit, in a letter the President of the Euro group noted that in addition to the Single Resolution Fund (and its backstop) “work needs to continue on a possible framework for liquidity in resolution, including on the possible institutional framework”. This briefing (1) describes the existing arrangements in the Banking Union, (2) compares those arrangements with the US and the UK regimes and (3) echoes ongoing reflections on possible new arrangements along the lines of the US and UK regimes, with a view to completing the Banking Union.