How to manage failures of non-systemic banks? A review of country practices

Since the Great Financial Crisis, many jurisdictions have developed special resolution regimes to ensure that banks can fail without systemic impact. Bank insolvency regimes complement resolution by providing a framework for the orderly winding-up of banks that do not meet the thresholds for resolution. Based on a review of the bank insolvency regimes of twelve selected jurisdictions, this paper identifies and discusses key features of bank-specific regimes that address the special nature of banking and the public interest considerations that may arise in the insolvency of any bank. The analysis provides insights on approaches and instruments that may help in the design of effective regimes for dealing with failing banks.

JEL classification: G21, G33, K20