Resolution Funding : Who Pays When Financial Institutions Fail?

Author/Editor:

Oana M Croitoru ; Marc Dobler ; Johan Molin

Publication Date:

August 16, 2018

Electronic Access:

Free Full Text. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Technical Guidance Note should not be reported as representing the views of the IMF. The views expressed in this Note are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

A key element of the international reform agenda since the Global Financial Crisis has been to strengthen resolution regimes and make government bailouts the last, not first, resort. A new international standard prescribes a range of tools, powers, and funding arrangements needed to resolve “any financial institution that could be systemically significant or critical if it fails.” It recommends having resolution funding arrangements set up in advance, “so that authorities are not constrained to rely on public ownership or bail-out funds as a means of resolving firms.” It leaves open significant flexibility with respect to the arrangements that would provide the resources authorities will need to carry out effective resolution. This paper offers a framework for weighing the relative advantages of different resolution funding options that could meet the standard. It presents the main developments to date and discusses the advantages and disadvantages of different options.

Series:

Technical Notes and Manuals No. 2018/01

Subject:

English

Publication Date:

August 16, 2018

ISBN/ISSN:

9781484371022/2075-8669

Stock No:

TNMEA2018001

Price:

Free

Format:

Paper

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