The revision of the banking crisis management and deposit insurance framework in Europe: Why is it important to enhance flexibility?

Abstract

The Crisis Management and Deposit Insurance Framework - which came into force about ten years ago - is under review by the European Commission. The need for its revision stems from the identification of certain shortcomings and inconsistencies that have emerged in its application in Europe and especially in Italy. The central topics of the debate focus on how resolution should be applied and on possible innovations regarding the tools that can be used to manage the crises of small and medium-sized banks, which until now have been managed on the basis of procedures and tools decided at the national level. The aim of this paper is to investigate the areas subject to reform, using as an evaluation parameter the objective of increasing the flexibility of the framework, as this is considered a fundamental requirement to ensure the full effectiveness of the overall banking crisis management system.

Keywords

• banking crisis management
• supervision
• early intervention measures;
• resolution
• deposit insurance
• preventative and alternative measure
• public intervention
• state aid regulation