Thomas Huertas vom Institue for Law and Finance an der Goethe-Universität Frankfurt wirft in dem Workingpaper "Containment and Cure:Some Perspectives on the Current Crisis" hauptsächlich zwei Fragen auf: Die Frage nach der Ursache der Weltwirtschaftskrise und wie man eine solche in Zukunft...

This paper analyses the proposition that adjusting structure can strengthen safety and therefore promote stability. It examines six proposals: Liikanen, Volcker, the US rule requiring foreign banking organisations (FBOs) to establish an intermediate holding company (IHC), depositor preference,...

From the start of 2016, new rules for bank resolution are in place – as spelled out in the Bank Recovery and Resolution Directive (BRRD) – across the EU, and a new authority (the Single Resolution Board, or SRB) is fully operational for resolving all banks in the eurozone.The implementation...

The bail-in tool for the resolution of failing banks depends critically on suspending the right of counterparties to terminate qualified financial contracts (QFCs) such as derivatives and repos. In theory, the stay provides the resolution authority with the time necessary to recapitalise and...

Banks cannot be made fail-safe. But they can be made safe to fail, so that the failure of a bank need not disrupt the economy at large nor pose cost to the taxpayer. In other words, banks can be made resolvable, and “too big to fail” can come to an end. To do so, the authorities, banks and...

This paper sets out the criteria that boards and supervisors should use to determine whether banks are governing risk correctly. First, boards have to set an overall risk target consistent with the overall return target. Second, the bank's business model has to set a risk capacity and risk...

In the economy expectations exercise enormous effects. Indeed, in finance prices and yields predominantly reflect current expectations about future cash flows and future interest rates. Change those expectations, prices and yields change as well. Change expectations radically enough, the change...

Resolution may begin with bail-in. But it does not end there. Resolution only ends when the bank is fully born again, i.e. when the resolution authority ceases to control the bank and the bank returns to normal governance and supervision. How that should happen has received relatively little...

Stress tests have two purposes. From a micro-prudential perspective, they aim to assure that banks have enough capital now to withstand the losses they might incur in the future, if the macro-economic environment were to become markedly more adverse. From a macro-economic perspective, stress...