EU reforms to the CMDI framework published in OJ

The legislative package reforming the crisis management and deposit insurance (CMDI) framework for banks in the EU was published in the Official Journal of the European Union (OJ). The package includes targeted amendments to: (i) the Bank Recovery and Resolution Directive (BRRD) regarding early intervention measures, conditions for resolution and funding of resolution action and Directive 2014/24/EU, regarding valuation services in resolution; (ii) the Single Resolution Mechanism Regulation (SRMR) regarding early intervention measures and conditions for resolution and funding of resolution action; and (iii) the Deposit Guarantee Schemes Directive (DGSD) regarding the scope of deposit protection, use of deposit guarantee schemes funds, cross-border co-operation, and transparency.

The reforms aim to strengthen the EU's ability to manage bank failures, including small and medium-sized banks, by facilitating access to industry-funded safety nets, such as national resolution funds and the Single Resolution Fund. These tools are intended to supplement a failing bank's own loss-absorbing capacity, thereby reducing reliance on taxpayer-funded bailouts, referred to as the "bridge the gap" mechanism. The transposition deadline for amendments to the two directives is 11 May 2028. The amendments to the SRMR and DGSD are to apply (with some exceptions) from 11 May 2028 and the amendments to the BRRD from 12 May 2028.

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