Single Resolution Mechanism - Main Features, Oversight and Accountability

16-07-2019

One of the key lessons learned from the financial crisis in 2007-2008 is that in order to reduce the direct and indirect costs of bank failures for national governments, one has to have a credible framework in place to deal with banks’ failures, including clear rules as to the allocation of losses and the conditions attached to the use of common resources, to provide strong incentives for taking measures of precaution in good times and minimise losses in times of crisis. To that end, Europe has put together a framework for resolving banks in difficulties. That framework is the Single Resolution Mechanism, headed by an European agency, the Single Resolution Board (SRB), based on Regulation 806/2014 and comprising all national resolution authorities of the Member States participating in the Banking Union.

One of the key lessons learned from the financial crisis in 2007-2008 is that in order to reduce the direct and indirect costs of bank failures for national governments, one has to have a credible framework in place to deal with banks’ failures, including clear rules as to the allocation of losses and the conditions attached to the use of common resources, to provide strong incentives for taking measures of precaution in good times and minimise losses in times of crisis. To that end, Europe has put together a framework for resolving banks in difficulties. That framework is the Single Resolution Mechanism, headed by an European agency, the Single Resolution Board (SRB), based on Regulation 806/2014 and comprising all national resolution authorities of the Member States participating in the Banking Union.