Visiting Researchers from Brazil and the Netherlands at the IMFS

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During the summer two visitors are investigating issues of financial stability at the IMFS. Lynette Janssen, Ph.D. candidate at the Hazelhoff Center for Financial Law at Leiden University, Netherlands, is preparing a thesis on the European bank resolution framework. During her stay at the IMFS from May until July she conducts research on the German bank resolution regime. During her stay in July and August, Andressa Guimarães Torquato Fernandes, Associate Professor of Public Finance and Tax Law at Fluminense Federal University in Rio de Janeiro, plans to formulate a research project about the regulation of money emissions.

In an interview Lynette Janssen talks about her research, in particular the Dutch, German and UK bank resolution frameworks, explaining the differences and the shortcomings.

Why did you choose the European bank resolution framework for your thesis?

During the last year of my studies at Leiden University, I wrote my master thesis about the nationalization of Dutch financial conglomerate SNS REAAL in 2013, and in particular the expropriation of debt under the Dutch Intervention Act by the Dutch Minister of Finance. I found the topic very interesting and decided to expand the research and to write about the European, UK and German bank resolution regimes as well.

What are the most striking differences between the Dutch, German and English bank resolution regimes?

Although the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism (SRM) aim to establish a more harmonised European bank resolution framework, some differences will remain to exist in the European Union. For example, the implementation of the BRRD into the national laws of the Member States is based on the existing national legislation. Moreover, from next year onwards the decisions on the resolution of the large and cross-border operating banks in the Euro zone (including the German and Dutch banks) will be taken on a European level by the Single Resolution Board of the Single Resolution Mechanism, whereas the decisions on the resolution of the banks in the United Kingdom remain to be taken by the national resolution authority, i.e. the Bank of England.

Which shortcomings do you still see after the implementation of the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism (SRM)?

Although the European Union now has a more harmonised bank resolution regime, many European banks have operations in countries outside Europe and many banks that are established in third countries have operations in Europe. The cross-border effectiveness and recognition of resolution measures on a global level remains a challenge and may create obstacles in the resolution of international operating banks.