EC Consults on Crisis Management and Deposit Insurance Framework
EC launched a targeted consultation on the review of crisis management and deposit insurance framework in EU. The consultation focuses on three EU legislative texts: Bank Recovery and Resolution Directive (BRRD), Single Resolution Mechanism Regulation (SRMR), and Deposit Guarantee Schemes Directive (DGSD). The main purpose of the review is to assess how the crisis management and deposit insurance framework works and to find ways to make the framework more proportionate, efficient, and consistent in handling the resolution or liquidation of any bank in EU, including by securing appropriate funding within and outside the Banking Union. The review also aims to improve synergies between crisis management and depositor protection, including by taking steps to complete the Banking Union.
The targeted consultation seeks technical feedback on stakeholder experience with the current framework and the need for changes in the future framework. The questions raised in the consultation relate to the following aspects:
- Resolution, liquidation, and other available measures to handle banking crises
- Deposit Guarantee Scheme (DGS) funds to be used to prevent failure of a bank
- Adequacy of available tools in resolution and insolvency
- Resolution strategy and funding sources in resolution
- Ability to issue minimum requirement for own funds and eligible liabilities (MREL) and impact on the feasibility of the resolution strategy
- Treatment of retail clients under the bail-in tool
- Level of harmonization of creditor hierarchy in the EU and impact on “no creditor worse off” principle
- Making depositor protection more robust, including via the creation of a common deposit insurance scheme in the banking union
The possible revision of the resolution framework as well as a possible further harmonization of insolvency law are foreseen in the respective review clauses of the three legislative texts (BRRD/SRMR/DGSD). By reviewing the framework, EC aims to increase its efficiency, proportionality, and overall coherence to manage bank crises in EU as well as to enhance the level of depositor protection, including through the creation of a common depositor protection mechanism in the banking union. Crisis management and deposit insurance, including a common funding scheme for the Banking Union, are strongly interlinked and interdependent and present the potential for synergies, if developed jointly.
In parallel to this more technical targeted consultation, a general public consultation will be launched in mid-February 2021. The public consultation shall comprise a selected list of questions on the bank crisis management and deposit insurance framework. These same questions also feature in the targeted consultation, seeking more specialized and technical views. Therefore, it is advised to reply to only one of the two versions (either the targeted consultation or the general public consultation) to avoid unnecessary duplication.
Related Links
Comment Due Date: April 20, 2021
Keywords: Europe, EU, Banking, BRRD, SRMR, DGSG, Deposit Insurance, Resolution Framework, Banking Union, Proportionality, MREL, Crisis Management Framework, EC
Previous Article
BCBS Proposes to Amend Rules on Minimum Haircut Floors for SFTsRelated Articles
APRA Publishes Results of Climate Risk Self-Assessment Survey
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
ACPR Publishes Updates Related to CRD IV and Covered Bonds
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
EIOPA Publishes Guidance on Climate Change Scenarios in ORSA
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
EBA and ECB Respond to Proposals on Sustainability Disclosures
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
EBA Publishes Multiple Regulatory Updates for Regulated Entities
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
EESC Opines on Proposals on CRR and European Single Access Point
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury Publishes Multiple Regulatory Updates in July 2022
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.
