Living Wills as a Catalyst for Action

Living Wills should help the resolution of a cross-border financial institution in difficulties by clarifying and simplifying the legal structure, and making that legal structure commensurate with the functional business parts of the wider institution. An innovation could be to incorporate a proposal for burden sharing between countries in Living Wills. This may enable burden sharing on an institution by institution basis. There remain, however, problems arising from the inconsistencies and incompatibility of the laws relating to the insolvency procedures in the various countries. Many countries are currently introducing special laws covering the process of resolution of systemically important financial institutions. This creates a window of opportunity to introduce a consistent legal basis for the resolution of systemically important financial institutions across the G20 countries.

[1]  C. Goodhart,et al.  Fiscal Burden Sharing in Cross-Border Banking Crises , 2012 .

[2]  R. Herring,et al.  The Corporate Structure of International Financial Conglomerates , 2012 .

[3]  R. Herring,et al.  A Safer World Financial System: Improving the Resolution of Systemic Institutions , 2010 .

[4]  E. Avgouleas,et al.  Recovery and Resolution Banks for Systemically Important Financial Institutions ('Living Wills') as a Catalyst for Action , 2010 .

[5]  Anat R. Admati,et al.  Increased-Liability Equity: A Proposal to Improve Capital Regulation of Large Financial Institutions , 2010 .

[6]  J. Dermine,et al.  In Banking, is Small Beautiful? , 2010 .

[7]  David A. Westbrook.  Out of Crisis: Rethinking Our Financial Markets , 2009 .

[8]  L. Pauly.  The Old and the New Politics of International Financial Stability , 2009 .

[9]  E. Avgouleas.  Banking Supervision and the Special Resolution Regime of the Banking Act 2009: The Unfinished Reform , 2009 .

[10]  Til Schuermann,et al.  Risk Measurement, Risk Management, and Capital Adequacy in Financial Conglomerates , 2003 .

[11]  K. King,et al.  The implementation of prompt corrective action: An assessment , 1995 .

[12]  K. Dowd,et al.  The experience of free banking , 1992 .

[13]  Finn E. Kydland,et al.  Rules Rather than Discretion: The Inconsistency of Optimal Plans , 1977, Journal of Political Economy.

[14]  R. Herring.  Wind-Down Plans As an Alternative to Bailouts: The Cross-Border Challenges , 2010 .

[15]  P. Tucker.  The Crisis Management Menu , 2010 .

[16]  Dalvinder Singh,et al.  Cross-Border Insolvency: The Case of Financial Conglomerates , 2009 .

[17]  D. Schoenmaker,et al.  Financial Supervision in Europe: A Proposal for a New Architecture , 2008 .