IDEAS home Printed from https://ideas.repec.org/a/pal/jbkreg/v26y2025i3d10.1057_s41261-024-00266-7.html
   My bibliography  Save this article

Automated bail-in: eliminating regulatory restraints

Author

Listed:
  • Urs B. Lendermann

    (Deutsche Bundesbank University of Applied Sciences)

Abstract

The Credit Suisse default in 2023 sparked considerable discourse about the absence of bank resolution procedures. Instead of resolution, public guarantees and unconventional emergency liquidity assistance (ELA) were provided. Of course, this occurred nearly two decades after the global financial crisis of 2007–2009, and evidently, there are still lessons to be learned. This study explores the bail-in tool and the total loss-absorbing capacity (TLAC) introduced by the G20 Financial Stability Board to eliminate the need for public bailouts of global systemically important banks in case of failure. Acknowledging the pragmatic standpoint, it is essential to recognise that banks hold divergent perspectives concerning their resolution planning while policymakers continue to grapple with the ‘too-big-to-fail’ dilemma without a discernible pathway for resolution. Thus, this study proposes contractual approaches to enhance the TLAC framework, incorporating a market-based trigger design. These improvements aim to create conditions that enable central banks to provide ELA, thereby averting systemic disruptions during a financial crisis.

Suggested Citation

  • Urs B. Lendermann, 2025. "Automated bail-in: eliminating regulatory restraints," Journal of Banking Regulation, Palgrave Macmillan, vol. 26(3), pages 370-391, September.
    • Handle: RePEc:pal:jbkreg:v:26:y:2025:i:3:d:10.1057_s41261-024-00266-7
    DOI: 10.1057/s41261-024-00266-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41261-024-00266-7
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41261-024-00266-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jbkreg:v:26:y:2025:i:3:d:10.1057_s41261-024-00266-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.