Bail-In and the Two Dimensions of Burden-Sharing

Abstract

The paper deals with burden-sharing as a key aspect of the overall feasibility and credibility resolution regime as an alternative to State bail-outs. For this purpose it explores the two aspects of burden-sharing: (a) the "vertical dimension", relating to the setting of an appropriate divide line between private and public financing of resolution costs and (b) the "horizontal dimension", relating to the setting out of a EU-wide resolution framework and international cooperation, tackling ext ante the issue of loss allocation across the jurisdictions concerned by the bank in financial distress. Both dimensions will be explored with a view to underscoring their interconnection within the EU financial and economic environment.

Keywords: bail-in bank resolution burden-sharing international cooperation