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The Funding of Bank Resolution

David Mayes

The Recovery and Resolution Directive puts emphasis on the financing of a resolution coming from the private sector and those that have knowingly taken on the risks rather than on the taxpayer through a bail out, which has been the recent experience. This paper appraises the likely sources of financing should a large cross-border bank fail, particularly those that might be bailed in. It suggests that if the intention is to achieve a balance between the 'fairness' of the incidence and the minimizing of the impact on the real economy then a careful appraisal of the way the resolution tools are applied will be needed.



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