The EU bank recovery and resolution directive – Some observations on the financing arrangements

Abstract

The Bank Recovery and Resolution Directive (BRRD) will require a high degree of consultation, coordination and synchronization within a prolonged period of financial sector stability to be properly implemented. In particular, we celebrate the ex ante risk-based elements of Single Resolution Fund for banks instituted by the BRRD aimed at preventing further government intervention. An aspect that has not been adequately addressed, however, is the management of risk and exposure to losses within these arrangements both in the short and medium terms. As things stand, it appears that the EU might be attempting to play a game of ‘creative compliance’ because of the time required.