An IMF working paper on Crisis Management and Resolution for a European Banking System has just been published.
This morning, Mr. Dominique Strauss-Kahn (the IMF's Managing Director) gave a speech on the same topic.
Abstract: The paper proposes an integrated crisis management and resolution framework for the EU's single banking market. It comprises a European Resolution Authority (ERA), armed with the mandate and the tools to deal cost-effectively with failing systemic cross-border banks, and is designed to address many fundamental operational and incentive problems. It also seeks to reduce moral hazard and better protect countries against the risk of twin fiscal-financial crises by detaching banks from government budgets. The ERA would be most effective if it were twinned or combined with a European Deposit Insurance and Resolution Fund.
