ResTech: innovative technologies for crisis resolution

Giuseppe Loiacono and Edoardo Rulli ()
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Edoardo Rulli: Single Resolution Board

Journal of Banking Regulation, 2022, vol. 23, issue 3, No 1, 227-243

Abstract: Abstract The use of financial technologies (FinTech) by financial market participants fostered a discussion among public authorities on the use technologies for regulatory (RegTech) and supervisory (SupTech) purposes. This paper discusses the application of innovative technologies to crisis resolution (ResTech) and sets out its potential scope of application. ResTech is the application of technologies: i) to support the work of resolution authorities in developing resolution plans and in resolving financial firms; and ii) to allow financial firms to achieve regulatory compliance and better risk management in a more effective and automated manner. This paper also argues that the features and market dynamics of resolution differ from those of RegTech and SupTech: there is little market incentive for the private sector to foster innovation in the area of crisis resolution. The lack of private sector incentives to invest in R&D on how to resolve a firm’s crisis leaves the task to resolution authorities. In addition, resolution-technologies may support the identification of optimal liquidation strategy for small and medium-sized financial firms, by ensuring the maximisation of creditors’ proceeds out of the insolvency estate.

Keywords: ResTech; Bank resolution; Innovation; Big data; Machine learning; C88; C89; G20; G38; O31; O32 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1057/s41261-021-00154-4

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