Publication

This paper examines the provisions for bail-in – that is, the principle whereby any public measure to recapitalize a bank with insufficient prudential capital must be preceded by a write-down or a conversion into equity of creditors’ claims – in EU state aid policies. The authors then assess if the EU’s new resolution framework is sufficiently coordinated and whether it satisfactorily addresses the question of systemic stability that may arise when investors fear that creditor claims are likely to be bailed-in in a bank crisis.