The Case for Bail-Ins

Thomas F. Huertas
Additional contact information
Thomas F. Huertas: Ernst & Young LLP, London

Working Papers from University of Pennsylvania, Wharton School, Weiss Center

Abstract: The case for bail-ins is simple. Bail-ins are superior to bail-outs, and bail-ins are superior to insolvency and liquidation. Bail-ins are potentially a powerful resolution tool, that can help make banks, even the largest and most complex banks, 'safe to fail'. Bail-ins can potentially help assure that investors, not taxpayers, bear the cost of bank failure. And bail-ins can materially help reduce both the social cost and the disruption to markets that insolvency and liquidation could cause. So bail-ins deserve a place in the resolution tool kit that should be at authorities' disposal, if a bank fails to meet threshold conditions and needs to be resolved. But for bail-ins to be effective, they will need to be combined with other tools, and both banks and authorities will need to take preparatory measures.

Date: 2012-12
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://fic.wharton.upenn.edu/fic/papers/12/12-17.pdf
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://fic.wharton.upenn.edu/fic/papers/12/12-17.pdf [301 Moved Permanently]--> https://wifpr.wharton.upenn.edu/fic/papers/12/12-17.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:upafin:12-17

Access Statistics for this paper

More papers in Working Papers from University of Pennsylvania, Wharton School, Weiss Center Contact information at EDIRC.
Bibliographic data for series maintained by ().