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Bank Supervision and Resolution: National and International Challenges

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  • Law

Abstract

Financial Stability Report 22 - December 2011 - Bank Supervision and Resolution: National and International Challenges - Summary of a Joint Workshop of CEPR, the University of Vienna and the OeNB FINANCIAL STABILITY REPORT 22 – DECEMBER 2011 107 On October 3 and 4, 2011, the Center of Economic Policy Research (CEPR), the University of Vienna and the Oester- reichische1Nationalbank (OeNB) held a joint research workshop on the topic “Bank Supervision and Resolution: National and International Challenges” at the OeNB in Vienna. In the two days of the workshop twelve papers selected through a call for papers were pre- sented.2 In his opening address, Peter Mooslechner (OeNB) went through some of the intricacies of resolution policies in an international context. Bank Resolution: Facing the Challenges The workshop took one of its central themes – bank resolution – head on by opening with a policy panel with Thorsten Beck (Tilburg University), Harry Huizinga (Tilburg University), Andreas Ittner (OeNB), Charles Kahn (University of Illinois) and Luc Laeven (IMF). There was a widely shared view among the panelists that resolution regimes are a key element in a multilay- ered system of financial stability instru- ments. The key role of resolution regimes comes of the fact that the rules of how institutions that fail will ultimately be dealt with determine very much their ex-ante behavioral incentives. On a practical note, Andreas Ittner pointed out that progress in legislation has to come in the form of special bank reso- lution frameworks outside the specific insolvency laws, because the heteroge- neity and complexity of insolvency laws in different countries would make any harmonization attempts a project of de- cades rather than years. The first research paper in the pro- gram by Max Bruche (CEMFI) provided an analysis of a specific incentive problem supervisors are regularly confronted with: How can banks with a high propor- tion of bad loans be made t

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