Bank rescues: putting bondholders on the hook

From bail-out to bail-in: Will the Single Resolution Mechanism set a new paradigm? The Financial Times reports.

1f8fc88f-8476-4007-a6ff-ab294868608aEurope’s new system, which puts bank bondholders rather than taxpayers on the hook for losses, has been cemented with the creation of the Single Resolution Board. Within the eurozone, much of the responsibility for preventing any backsliding in the application of the new standards will fall to Elke König, the 61-year-old former head of Germany’s financial regulator BaFin, and the first chief of the SRB.

It is a crucial element in Europe’s three-pillar “banking union” construct, which also spans eurozone regulatory supervision and deposit guarantees. The implications are vast but the big question is: will it work?”

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