The ICMA has submitted a letter in response to the questions enumerated in the European Commission's "Discussion paper on the debt write-down tool – bail-in".
While ICMA appreciates that the Commission is not specifically seeking input by way of general statements or opinions on the discussion paper, the ICMA is keen to play a constructive role in debating the formation and applicability of the bail-in provisions, and consequently respectfully requests that the Commission give careful consideration to the points raised herein.
Whilst being supportive of the Commission’s endeavours, the ICMA perceives that there remain some significant overriding challenges which will need to be overcome in the final design of any such senior unsecured debt bail-in regime. In overall terms, the ICMA believes it is essential that the application of the bail-in be respectful of the hierarchy of claims, with senior unsecured debt holders only expected to absorb losses after all other less senior ranking providers of capital. The ICMA also considers that other measures to increase the quality and quantity of capital and the stability of the financial system should be completed before bringing in a bail-in regime.
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