Challenges and prospects of the new banking resolution regime

Abstract

The consequences of the new banking resolution regime on the evolution of the European financial system were discussed at a Chatham House ‘Executive Seminar on Banking Resolution’ organized by the Florence School of Banking and Finance and held in Florence on 14-15 July 2016. The executive seminar brought together academics, EU policy-makers, investors, and industry practitioners to discuss the impact of the new resolution regime on banks, regulators and investors. Participants also exchanged views on liquidity support and exit strategies in the upcoming resolution phase. The main conclusions stemming from the interaction among panelists are the following: 1. Most of the systemic institutions still need to improve their internal governance in order to be in line with what is considered international best practice; 2. Despite some criticisms and unresolved issues, bail-in represents a clear and radical improvement from the government bail-outs that followed the Eurozone crisis; 3. Information disclosure to large investors is a major upcoming challenge posed by resolution; 4. A deeper assessment of the liquidity available for resolution needs to be carried out.