CIAO DATE: 07/2014
May 2014
Centre for European Policy Studies
This CEPS Policy Brief examines the provisions for bail-in in the European Union – that is, the principle whereby any public measure to recapitalise a bank with insufficient prudential capital must be preceded by a write-down or conversion into equity of creditors’ claims – in state aid policies and in the new resolution framework for failing banks, with two aims: i) to assess whether and how they are coordinated and ii) more importantly, whether they address satisfactorily the question of systemic stability that may arise when investors fear that creditors’ claims are likely to be bailed-in in a bank crisis.
Resource link: Bail-in Provisions in State Aid and Resolution Procedures: Are they consistent with systemic stability? [PDF] - 227K