Evolution of the BoE's approach to resolution

The Bank of England (BoE) has published a speech by Dave Ramsden, deputy governor, markets and banking, on the evolution of the BoE's approach to resolution. The speech discusses the balance to be struck in optimising ex ante resilience and ex post costs and the response to recent events and the changing environment. Mr Ramsden states that in terms of bank resolution, assuming no unexpected developments, the BoE has now implemented the key policy developments he expects it to – certainly in his remaining term as Deputy Governor, which ends in September 2027. Later this year, the BoE expects to publish an operational guide to the transfer resolution strategies and an update to its operational guide to bail-in. Subject to the findings of the third RAF assessment which begins later this year and market developments, the BoE expects to confirm the timing of the fourth assessment as not being before 2029-30. There is more to do to operationalise the central counterparty (CCP) resolution regime and later this year the BoE expects to consult on resolvability standards for CCPs.

To maintain trust in sterling stablecoins the BoE is also considering what failure arrangements might need to be in place both now and in the future. The BoE will continue to work closely with HM Treasury and other authorities to determine the appropriate interim and comprehensive long-term issuer-failure arrangements for systemic stablecoins. In the longer term, Mr Ramsden suggests that trust in stablecoins may require some form of insurance scheme analogous to that which applies to bank deposits and a statutory resolution arrangement that ensures coinholders are preferred creditors in any insolvency process. Given that the BoE does not regulate hedge funds and private finance firms, it uses alternative measures and work to monitor those elements of the market, such as the system-wide exploratory scenario, and a range of work to improve the resilience of market-based finance, including the contingent NBFI repo facility.

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