Reset Required: The Euro Area Crisis Management and Deposit Insurance Framework
نویسندگان
چکیده
The crisis management and deposit insurance (CMDI) framework in the euro area requires a reset. Currently is far more likely to manufacture rather than enable authorities manage one. Specifically, current trigger doom loop between weak banks governments terminate or untie it. Nor will necessarily protect deposits. There no guarantee that covered deposits remain euro, if bank which held fails, and/or Member State failing headquartered defaults. The CMDI aims enhance financial stability, limit recourse taxpayer money, promote competition depositors. These policy objectives valid. What needs change method use achieve those objectives. First, approach integrate micro- macro- aspects of management. In particular, take account prospective roles European Stability Mechanism, both as provider credit States well guarantor Single Resolution Fund. Second, encompass central liquidity individually market whole. Finally, recognize by time any reform proposed result this review would become effective, SRB significant institutions have completed transition fully resolvable via bail-in. This affords opportunity reset expectations about resolution. The should make framework uniform. there be single presumptive path for dealing with failed banks: bail-in facilitate orderly liquidation under solvent- wind down strategy. set stage transformation Fund (SRF) into Deposit Guarantee Scheme (SDGS) backstop from Mechanism (ESM). addition, measures taken avoid forbearance, including transfer responsibility emergency assistance (ELA) national ECB create lender last resort. schemes investors resort gone-concern capital bank. ensure extends all banks, without access markets. Together, these complete Banking Union, discipline, imposing additional burdens on taxpayers, help governments, strengthen stability.
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ژورنال
عنوان ژورنال: Social Science Research Network
سال: 2021
ISSN: ['1556-5068']
DOI: https://doi.org/10.2139/ssrn.3836363