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Special Report 01/2021: Resolution planning in the Single Resolution Mechanism

English icpdf.png 4 MB
14/01/2021

In 2014, the EU established the Single Resolution Mechanism (SRM) to ensure orderly resolution of failing banks with minimal burden to taxpayers, avoiding costly bail-outs. We assessed the appropriateness of the policy framework and organisational setup of resolution planning, as well as the quality and timing of the resolution plans adopted for banks. We found that the SRM has made progress, but some key elements are missing and further steps are needed. In particular, the set of policies did not yet address all relevant areas or revealed weaknesses. Certain shortcomings such as funding in resolution or harmonisation of national insolvency proceedings for banks have to be resolved by the legislators. We recommend that the SRB improve its policies for resolution planning, ensure timely adoption and full compliance of resolution plans with the legal requirements and assign sufficient staff to oversee resolution planning of national resolution authorities for less significant banks. We invite the legislators to set up more objective and quantified thresholds for triggering early intervention measures.

ECA special report pursuant to Article 287(4), second subparagraph, TFEU.