Andrew Gracie: Making banks resolvable - the key to making resolution work

Speech by Mr Andrew Gracie, Executive Director of Resolution of the Bank of England, at the Risk Minds Conference, Amsterdam, 4 December 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

Resolution has come a long way since G20 Leaders put together the post-crisis financial reform agenda in summits in London and Pittsburgh in 2009. In some ways, it represented the most notable gap, and significant change in the pre-crisis regulatory architecture. Nearly ten years on, huge progress has been made in establishing effective resolution arrangements and the commitment to ending too-big-to-fail (TBTF) is undimmed.

The immediate priority in this effort was to put in place the necessary legal frameworks. Agreement in 2011 of Financial Stability Board (FSB) Key Attributes for Effective Resolution Regimes provided the international standards to ensure a consistent approach to the design of resolution regimes across G20 jurisdictions.

The UK now has in place a comprehensive bank resolution regime that is compliant with international standards and will remain so after Brexit. Similarly, for all advanced economies, there are now resolution regimes that are largely compliant with the Key Attributes in all the jurisdictions that are home to global systemically important banks (G-SIBs).

But the Key Attributes were about effective resolution regimes rather than resolvable firms - they defined a tool-kit but not how to use it; and a process for resolution planning for G-SIBs but not what would make a firm resolvable. Powers without resolvability leaves resolution authorities vulnerable.