Italian Crisis Management Procedures in the Banking Sector

The public interest in enhancing those key development factors consisting of savings and investments deeply influences the Italian law system on banking and financial markets in general as well as legislation on crisis prevention and management in particular. The ratio of a strengthened state intervention in this sector is aimed at reducing the probability of a systemic crisis, avoiding losses in economic welfare that follow a banking crisis, minimising taxpayer exposure and safeguarding the trust and confidence of investors and savers. Banks, as well as financial and investment intermediaries, are commonly considered not only — and not always — to be “too big”1 (which is more true for multinational banks, less so for small domestic ones), but also — and more often — “too interconnected”, “too important” and “too complex” to fail.2 Those are enterprises whose critical functions are such that their unexpected liquidation would cause severe adverse consequences for the rest of the financial system and global economy. Thus, the guiding regulatory principle of faith in the free market and its self-corrective nature, which was strong and pervasive in other systems during the last few decades,3 was therefore considered by the Italian legislator to be not sufficient alone to ensure the stability of the financial and banking system.