The European Banking Federation (EBF) welcomes the European Commission Communication on „An EU Framework for Crisis Management in the Financial Sector‟ presented today. It sees it as a useful roadmap for the forthcoming Commission legislative proposal on Cross Border Crisis Management, which is expected to be published by April 2011.
The EBF has been supportive of the Financial Stability Board‟s and the G20‟s call for designs and systems which would help restructure or resolve financial institutions in crisis, thus avoiding public support on the one hand and guaranteeing financial stability and continuity of vital economic functions on the other. “We believe that exposed banks should be allowed to fail, if worse comes to worse, declared Guido Ravoet, Secretary General of the EBF, but taxpayers should not have to step in and pay the bill.”
With regard to the funding of the resolution tools, the EBF looks forward to the Commission‟s impact assessment to understand any desired fund size and functioning. “It is important that the final calibration of the funding requirement takes into account the structure of the national banking systems, explained Ravoet. And it should also consider carefully other taxing and regulatory funding demands imposed on banks so far, be they on financial stability or capital and liquidity. They should all be subject to appropriate timing and phasing in.”
Finally, the EBF welcomes the formation of colleges which will coordinate the preparation and prevention measures as well as crisis management and resolution. The Federation believes that colleges are an indispensible component for facilitating cross-border crisis management.
© EBF
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