The global financial crisis of 2008 outlined the need to reform the banking system because it was the centre of the global financial system and because taxpayers’ funds were often used to bail out banks caught in financial crises. This book provides insights into understanding foreign bank resolutions and ways for their effective use in cross-border bank resolution.
This book defines a bank resolution as the set of procedures and measures taken by the authorities to solve the situation of an unviable bank. It forms part of the supervision conducted by banking supervisory authorities (p. 24) and looks closely into the legal system of the United States, the European Union, and China, investigating their contemporary legal instruments that recognize foreign bank resolutions. A bank resolution occurs when authorities determine that a failing bank cannot go through normal proceedings without harming the public interest and causing financial instability. These jurisdictions are chosen because of the high number of global systemically important banks (G-SIB). The author analyses the method of foreign bank resolution in each of these jurisdictions, highlights the need to formulate uniform policies across borders for such resolutions, and argues that since most banks operate globally, global cooperation can bring about greater economic stability. Further, he includes an analysis of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency.
The book is divided into four parts. Part I deals with the introduction and explanation of the topic. Part II conducts a comparative study among the different jurisdictions: the European Union, the United States, and China. Part III analyses the standard benchmark for recognizing financial resolutions and its overall effectiveness in attaining the end objective, financial stability. A chapter is dedicated to studying the creditors’ positions in adopting the financial resolution. The author then gives a detailed description of the national laws available in each jurisdiction to recognize these resolutions. In conclusion, Part IV deals with how the future framework of cross-border recognition of foreign resolution action should ideally be framed, including domestic law instruments, international agreements, model law, customary international law, and soft law.
The author studies the reports presented by international financial bodies such as the Basel Committee on Banking Supervision, the International Monetary Fund, and the Financial Stability Board, together with the formation of globally functioning banks and institutions such as the G-SIB and other banks operating internationally. The banking system has become deeply interconnected, and it is vital to have an effective banking resolution system so that the downfall of one international bank does not have a global domino effect. This book explores the need for and the importance of recognizing foreign bank resolutions and, by employing a comparative study method, provides a future framework for such resolutions.
Competing interests
The author declares none.
