European Commission Launches Consultation on EU Crisis Management and Deposit Insurance Framework

The European Commission has launched a consultation to aid its review of the EU crisis management and deposit insurance framework. The framework consists of the EU Bank Recovery and Resolution Directive, the EU Single Resolution Mechanism Regulation and the EU Deposit Guarantee Scheme Directive. It was introduced in the aftermath of the financial crisis and has applied across the EU since 2015 (in the case of BRRD and DGSD) and 2016 (in the case of SRMR). A number of problems have been identified with the framework, as described in the European Commission's November 2020 roadmap for this consultation. Key issues include: (i) incentivization of the use of tools other than resolution by Member States; (ii) discrepancy in the use and availability of insolvency tools across Member States, leading to inconsistent application of the framework; (iii) limited legal certainty and predictability as to when the framework will be used; and (iv) variation in the scope of depositor protection and payout processes across Member States.
 
The consultation seeks the views of stakeholders, particularly banks, investment firms, payment and electronic money institutions and financial infrastructure providers, on their experience with the framework and their views on revision, including:
 

• whether the framework has achieved its objectives and whether the measures and procedures in the framework have contributed to the management of banks' crises;
• whether there is merit in extending the tools and powers in BRRD to circumstances outside resolution and whether the use of resolution should be extended to a larger population of banks or, conversely, other rules should be introduced outside resolution where the public interest test is not met; and
• whether the conditions to accessing resolution funds or the deposit guarantee scheme should be revised.

Responses to the consultation should be submitted by May 20, 2021.

View the European Commission's consultation.

View the consultation webpage.

View details of the European Commission's roadmap.
 
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