EBA replies to the EU Commission’s request for advice on how to develop a legislative framework for crisis resolution and deposit guarantees
On 22 October 2021 the European Banking Authority (EBA) published its reply to the EU Commission’s call for advice on the financing of crisis resolutions and insolvency proceedings. The Commission’s request relates to the review of the bank crisis management and deposit insurance (CMDI) framework now under way.
The request mainly related to the following:
- The capacity of banks to access resolution financing arrangements.
- The conditions for bank guarantee schemes to intervene in the measures taken in a crisis situation in light of the current framework and possible new options.
- The ability of small and medium-sized banks to issue loss-absorbing financial instruments
The EBA’s response is based on a sample of 368 banks in the EU and analyses the ability of the institutions to exploit the funding sources under the current framework by testing four different depositor hierarchy scenarios, but taking account of the present requirements for own funds and eligible liabilities (in effect at the end of 2019).