Forbearance, Resolution and Deposit Insurance

27 Pages Posted: 5 Nov 2020

See all articles by Martin F. Hellwig

Martin F. Hellwig

affiliation not provided to SSRN

André Sapir

affiliation not provided to SSRN

Marco Pagano

University of Naples Federico II - Department of Economics and Statistics; Centre for Studies in Economics and Finance (CSEF); Einaudi Institute for Economics and Finance (EIEF); Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Viral Acharya

affiliation not provided to SSRN

Leszek Balcerowicz

National Bank of Poland

Arnoud Boot

affiliation not provided to SSRN

Markus K. Brunnermeier

affiliation not provided to SSRN

Claudia Buch

Deutsche Bundesbank

Ieke van den

affiliation not provided to SSRN

Charles Calomiris

affiliation not provided to SSRN

Daniel Gros

Centre for European Policy Studies, Brussels; CESifo (Center for Economic Studies and Ifo Institute)

Dario Focarelli

ANIA - Italian Association of Insurance Companies; Catholic University of Milan

Alberto Giovannini

Columbia University - Columbia Business School

Andreas Ittner

affiliation not provided to SSRN

Dirk Schoenmaker

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM); Centre for Economic Policy Research (CEPR)

Charles Wyplosz

University of Geneva - Graduate Institute of International Studies (HEI); Centre for Economic Policy Research (CEPR)

Date Written: July, 2012

Abstract

The report discusses a variety of issues involving difficulties in the banking sector, with a view to ascertaining the appropriate institutional infrastructure in the context of the European Union and the euro area. Forbearance on the part of banks dealing with delinquent borrowers is problematic if it is designed as a way to game creditors and supervisors. Supervisors should not tolerate excessive forbearance; failure to intervene early tends to increase the costs of the crisis. Macro-prudential concerns should not induce the authorities to delay clean-ups of banks in difficulties. To minimise the macroeconomic fallout from banking problems and to reduce the temptation for authorities to delay and hide problems in banking, it is necessary to have a viable resolution regime that leaves room for authorities to reduce the systemic fallout from resolution. The Advisory Scientific Committee calls for the establishment of strong European bodies responsible for banking supervision and bank resolution. A European competence is necessary to ensure that cross-border concerns are given appropriate weight in supervision and resolution.

Keywords: bank regulation, bank resolution, loan forbearance

JEL Classification: G28, G33

Suggested Citation

Hellwig, Martin F. and Sapir, André and Pagano, Marco and Acharya, Viral and Balcerowicz, Leszek and Boot, Arnoud and Brunnermeier, Markus K. and Buch, Claudia and den, Ieke van and Calomiris, Charles and Gros, Daniel and Focarelli, Dario and Giovannini, Alberto and Ittner, Andreas and Schoenmaker, Dirk and Wyplosz, Charles, Forbearance, Resolution and Deposit Insurance (July, 2012). ESRB: Advisory Scientific Committee Reports 2012/1, Available at SSRN: https://ssrn.com/abstract=3723321

Martin F. Hellwig (Contact Author)

affiliation not provided to SSRN

No Address Available

André Sapir

affiliation not provided to SSRN

No Address Available

Marco Pagano

University of Naples Federico II - Department of Economics and Statistics ( email )

Via Cintia - Monte S. Angelo
Napoli, 80126
Italy
+39 081 675306 (Phone)
+39 081 7663540 (Fax)

Centre for Studies in Economics and Finance (CSEF) ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

Einaudi Institute for Economics and Finance (EIEF)

Via Sallustiana, 62
Rome, 00187
Italy

Research Institute of Industrial Economics (IFN)

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http:/www.ecgi.org

Viral Acharya

affiliation not provided to SSRN

No Address Available

Leszek Balcerowicz

National Bank of Poland ( email )

00-919 Warsaw
Poland

Arnoud Boot

affiliation not provided to SSRN

Markus K. Brunnermeier

affiliation not provided to SSRN

No Address Available

Claudia Buch

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Ieke van Den

affiliation not provided to SSRN

No Address Available

Charles Calomiris

affiliation not provided to SSRN

No Address Available

Daniel Gros

Centre for European Policy Studies, Brussels ( email )

1 Place du Congres
B-1000 Brussels, 1000
Belgium

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Dario Focarelli

ANIA - Italian Association of Insurance Companies ( email )

Via di San Nicola da Tolentino, 72
Rome, 00187
Italy
+39.06.32688619 (Phone)
+39.06.91622570 (Fax)

Catholic University of Milan ( email )

Largo Gemelli 1
Milan, MI Milano 20123
Italy

HOME PAGE: http://https://docenti.unicatt.it/ppd2/it/#/it/docenti/71049/dario-focarelli/profilo

Alberto Giovannini

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Andreas Ittner

affiliation not provided to SSRN

Dirk Schoenmaker

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.rsm.nl/people/dirk-schoenmaker/

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Charles Wyplosz

University of Geneva - Graduate Institute of International Studies (HEI) ( email )

PO Box 136
Geneva, CH-1211
Switzerland
+41 22 908 5946 (Phone)
+41 22 733 3049 (Fax)

HOME PAGE: http://heiwww.unige.ch/~wyplosz

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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