The Role for Deposit Insurance Funds in Dealing with Failing Banks in the European Union
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Summary:
This paper argues that in the European Union (EU) deposit insurance funds are too difficult to use in bank resolution and too easy to use outside resolution. The paper proposes reforms in three areas for the effective management of bank failures of small and medium-sized banks in the European Union: making resolution the norm for dealing with failing banks; establishing a common DIS for the European Union; and increasing funding and backstops for deposit insurance while removing constraints on their use for resolution measures. Without these changes, the European Union will continue to be challenged by banks that are too small for resolution and too large for liquidation.
Series:
Working Paper No. 2022/002
Subject:
Bank resolution Bank resolution framework Deposit insurance Distressed institutions Financial crises Financial institutions Financial safety nets
Frequency:
regular
English
Publication Date:
January 7, 2022
ISBN/ISSN:
9781616358075/1018-5941
Stock No:
WPIEA2022002
Pages:
27
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