Photo of Daniele Nouy, head of banking supervision at the ECB

Orderly failure: The EU’s Bank Recovery and Resolution Directive

  • The EU has shifted from a bailout to a bail-in approach to bank failures
  • The BRRD directive focuses on early interventions to avoid costly resolutions
  • The system seems to work for “idiosyncratic” failures but is untested by a major one

Faced with a cascade of banking failures in 2008-2012, European authorities decided to rescue most lenders through multibillion-euro government bailouts. Crisis management had to occur on a political level, mostly under extreme time pressure, with the absolute priority of preventing chaos from spreading into a wider economy that was already severely depressed.

Ten years later, the idea that governments must ride to the rescue of distressed banks to preserve financial stability has gone out of fashion. The disruptive effect of such bailouts on public finances and rising sovereign debt are usually put forward as arguments against such assistance.

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Professor Elisabeth Krecké
The bailouts of 2008-2012 came at a high cost to European taxpayers, though most of the money was repaid
read more about it in the report
What's inside
  • The EU has shifted from a bailout to a bail-in approach to bank failures
  • The BRRD directive focuses on early interventions to avoid costly resolutions
  • The system seems to work for “idiosyncratic” failures but is untested by a major one
Who will benefit?
  • Report is targeted to the decision makers in cross country manufacturing – suppliers, manufacturers, logistics.
  • Also considered useful for the administrative university facilities, to better understand the possibe effects of current decisions.
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