Studies On EU Single Resolution Mechanism

The 2008 global crisis caused a significant deterioration in the EU economic situation.To cope with the financial crisis and overcome a series of problems shown in the EU bank-dominated financial industry structure,the supervision of the EU banking sector was reformed and the most notable change was the development of the"Banking Union".The "banking union" aims to achieve the unification from three levels,namely Single Supervision Mechanism,Single Resolution Mechanism and Deposit Guarantee Schemes.The Single Resolution Mechanism will not only ensure that its Member States can deal with failing banks in a predictable and similar way,but also provide a good reference for a worldwide resolution framework.Besides,as the EU has a close investment relationship with the Chinese government and investors,the reform of EU supervisory policies and financial law will also have a direct or indirect impact on China.Chapter 1 defines the "bank resolution" in its narrow sense as measures taken by resolution authority,such as assets separation,write-downs,and bail-in,in this case,bank resolution is quite different with bank liquidation;Besides,through the analyst of two characteristics of banks-the public nature of banks and the serious negative externalities of failing banks,the chapter 1 puts forward the importance of abandoning the "too big to fail" hypothesis and constructing the bank recovery and resolution mechanism.Also,Chapter 1 defines 4 basic principles for bank resolution,including minimizing cost,bank shareholders and creditors taking risks,no creditor worse off and fair banking sector competition principle.What’ s more,Chapter 1 introduces the establishment of "banking union" to provide background for studies on the Single Resolution MechanismChapter 2 sorts out the legal framework of Bank Recovery and Resolution Directive and the Single Resolution Mechanism Regulation,with the purpose of analyzing its reference significance and existing problems.Chapter 2 points out that Single Resolution Mechanism Regulation has two positive implications,one is to help the EU get out of the trap of state aid in failing banks;the other is to provide new ideas for cross-border bank resolution cooperation.However,there are still much to be done,Single Resolution Mechanism does not mean that the Member States will give up inJ ecting public funds,nor does it mean that the problem of cross-border resolution has been completely solved within the EUChapter 3 studies Italian Legislative Decree 180 and 181 enacted according to Bank Recovery and Resolution Directive as well as 3 typical cases since the Single Resolution Mechanism was built.In this chapter,it seems that the resolution measures taken by one Member State according to its national resolution law will face difficulties to get recognition in other Member State due to the differences in their legislations,thus we can expect that banking resolution cooperation will be inefficient.On the other hand,the cases show that the current EU legal framework provides competent authorities too much discretion on the choice of resolution,liquidation or state-aid method.Therefore,EU Member States are very likely to continue to rescue failing banks with taxpayers’money instead of using resolution measures.In this case,the original intention and the objectives of the Single Resolution Mechanism will probably not be achievedChapter 4 points out the existing jurisdictional conflicts in cross-border bank resolution and provides possible solutions.For jurisdictional conflicts of the home country and the branch host country,the home country competent authorities should be given the power to start and dominate the resolution proceedings,while host countries where the branches are set up should take the responsibility to assist main proceedings in the home country.Under specific circumstances,like for the public interest reasons,host countries should also have the power to initiate secondary bank resolution procedures in its territory.For jurisdictional conflicts of the home country and the subsidiary host country,the "Head Office Function Test" can be considered to determine whether the home country competent authorities can initiate resolution proceedings applicable to its subsidiariesChapter 5 aims to provide suggestions for Chinese banking supervisory reforms concerning bank resolution.Besides,this chapter also considers the possible impact of EU financial supervisory policies and legal reforms on China,in this case,Chapter 5 will preliminarily give Chinese supervisors the overall ideas to deal with resolution proceedings and resolution measures taken by foreign countries.