Are Banks Finally Resolvable? A Perspective from Europe

Abstract

AbstractAfter the global financial crisis, policymakers in many countries promised that banks should never again be bailed out using taxpayers’ money. Therefore, new regulatory measures were introduced, most importantly new bank resolution regimes like the Single Resolution Mechanism in the euro area. This paper shows that these measures contributed to a reduction in bail‐out expectations and a return of market discipline in Europe. But European banks are still far from being truly resolvable. More remains to be done.