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See detailExploring Governance Issues between the SRB and the ESM in the Use of the Common Backstop
Lupinu, Pier Mario UL

E-print/Working paper (2020)

To date, the resolution of the Banco Popular Español, being the first and only resolution case in the euro area, has had the “benefit” of bringing to light several shortfalls of this crisis management ... [more ▼]

To date, the resolution of the Banco Popular Español, being the first and only resolution case in the euro area, has had the “benefit” of bringing to light several shortfalls of this crisis management system. Back then, thanks to the sale of business, the need of the use of the Single Resolution Fund (SRF) has been avoided, prompting criticism on whether the fund had sufficient means to overcome a major widespread crisis. During the period elapsed from the last financial crisis, the euro area banking sector has built capital and liquidity buffers, which were aimed at protecting them for future shocks. Although it is now widely accepted that crises are of a cyclical nature, new risks and the high interconnectivity of today’s economic activities brought an unexpected crisis due to the current pandemic. The consequences of this unprecedented event in modern history had severe effects to the worldwide economy, mostly for the boundless block of labour activities, which caused severe losses for households, enterprises and governments that consequently affected the financial intermediation function of the banks. Concerning the European Stability Mechanism (ESM), the current pandemic has had the effect to put temporary on hold the discussion on the revision of the ESM Treaty, including its role as a Backstop to the SRF, so that the Mechanism could experience a new role through the ESM Pandemic Crisis Support. In such a framework, this paper aims to bring back the attention to the unfinished path in the establishment of the Common Backstop by addressing an important element of risk, namely its decision-making process. The main aim is to explore possible governance issues, which could hamper a timely and effective use of the Common Backstop, in the case that the SRF would be depleted and no alternative funding sources would be available. [less ▲]

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See detailThe Flow of Information Among Authorities Involved in the Banking Union’s Resolution Procedure: The Case of the SRB and the ECB
Lupinu, Pier Mario UL

E-print/Working paper (2020)

The flow of information is vital for the smooth functioning and certainty of the successful outcome of a resolution procedure during resolution planning and execution. As a result, the exchange of ... [more ▼]

The flow of information is vital for the smooth functioning and certainty of the successful outcome of a resolution procedure during resolution planning and execution. As a result, the exchange of relevant information has become highly influential in current debates. This article will focus on the exchange of information between the Single Resolution Board (SRB) and the European Central Bank (ECB). Firstly, the Authorities decided to arrange the rules for sharing information bilaterally in the form of a Memorandum of Understanding (MoU). While this framework of cooperation and exchange of information between the SRB and the ECB constitutes an obligation under Article 30(7) of the Single Resolution Mechanism Regulation (SRMR), it was drafted in the non-binding form of an MoU. The general purpose of an MoU is to establish the basis for cooperation and convergence of intentions. Such foundations aim to strengthen the resolution procedure by joining forces to obtain more accurate and complete data with better coordination of tasks and resources in order to achieve the most solid result possible within a tighter timeframe. [less ▲]

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See detailThe impact of Brexit on “bail-inable” liabilities under English law
Lupinu, Pier Mario UL

E-print/Working paper (2020)

Over three years have passed since 29 March 2017, the date when the United Kingdom (UK) triggered Article 50 of the Treaty on European Union (TEU). This date has become well-known, for paving the way to ... [more ▼]

Over three years have passed since 29 March 2017, the date when the United Kingdom (UK) triggered Article 50 of the Treaty on European Union (TEU). This date has become well-known, for paving the way to multiple legal issues, which mostly depend on the finalisation of an agreement setting the conditions for the future relations between the European Union (EU) and the UK. Despite recent political declarations, the Brexit outcome is now clear, and a transitional period has just begun. As a result, for the resolution of credit institutions established in the EU, the bail-in of liabilities previously established under English law could become problematic. To date, the EU framework for the resolution of credit institutions (namely, the Bank Recovery and Resolution Directive – BRRD) lacks a provision for the direct recognition of liabilities governed under third-country law. However, through its Article 55, the BRRD leaves to the EU Member State (MS) the duty to require entities to include “resolution-proof” clauses or, alternatively, to conclude a binding agreement with the relevant third country. This leaves a legislative gap concerning this direct recognition. By analysing the current EU legal framework for the bail-in of liabilities established with contracts governed by third-country law, with a view to identify its weaknesses, this paper aims at addressing possible practical solutions. The purpose is to ease the resolution process for the relevant administrative authority of the EU MS in charge of the resolution procedure, without the need of an immediate intervention of the legislator. Indeed, a solution for such gap in the BRRD might be disentangled outside the Brexit withdrawal agreement, or with specific arrangements between the EU/EU MS and the UK administrative authorities. [less ▲]

Detailed reference viewed: 54 (5 UL)