Cash outflows in crisis scenarios. Do liquidity requirements and reporting obligations give the Single Resolution Fund sufficient time to react?

Please note: Each In-Depth Analysis is assigned a DOI (digital object identifier), which is a safe and long term way of ensuring a hyperlink to the full text of this report. However, when ESO creates this record, on occasion the DOI still has not been activated by the EU Bookshop. If you find the source url hyperlink does not work please use the alternative location hyperlink listed as a related url.The large majority of the more than €2.5tr of public and monetary support that euro area banks received between 2008 and 2016 was liquidity support. Liquidity has nevertheless been inadequately addressed in the legislative overhaul following the global financial crisis. This paper focuses on liquidity in resolution, the moment when the need for liquidity is most acute.

Based on an assessment of the liquidity needs as well as the role and size of the central bank facilities and Single Resolution Fund, it draws the conclusion that a back-stop for the resolution fund, prompter corrective action and better information exchange between the authorities involved appear to be required in order to improve the functioning of the resolution mechanism.

Council of the European Union: Policies: Banking union: Single Resolution Mechanism http://www.consilium.europa.eu/en/policies/banking-union/single-resolution-mechanism/

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