EU Regulation Simplifies Financial Resolution Process

Brussels - In an effort to strengthen financial stability and prevent future crises, the European Commission has implemented new regulations aimed at streamlining the resolution process for credit institutions and investment firms.

Streamlined Resolution Process

The regulations, which come into effect today, lay down implementing technical standards with regard to procedures and standard forms and templates for the provision of information for the purposes of resolution plans. This move is expected to improve the efficiency and effectiveness of the financial sector’s crisis management framework.

Key Features of the Regulations

• The Commission Delegated Regulation (EU) 2018/1624 specifies the criteria relating to the methodology for assessing the value of assets and liabilities of institutions or entities.
• The regulation sets out minimum requirements for own funds and eligible liabilities.
• Additional regulations have been implemented to improve financial stability and crisis management, including:
  • Commission Delegated Regulation (EU) 2018/345, which specifies criteria relating to methodologies for valuing differences in treatment in resolution.
  • Commission Delegated Regulation (EU) 2017/867, which sets out classes of arrangements to be protected in a partial property transfer under Article 76 of the Directive.
  • Commission Implementing Regulation (EU) 2016/962, which lays down implementing technical standards with regard to uniform formats, templates and definitions for the identification and transmission of information by competent authorities and resolution authorities.

Benefits of the Regulations

The new regulations are expected to enhance financial stability by improving the ability of credit institutions and investment firms to recover from financial distress. The measures will also help to prevent the spread of risk across the financial sector and reduce the likelihood of future crises.

Commitment to Financial Stability

“These regulations demonstrate our commitment to strengthening financial stability and crisis management in the EU,” said a Commission spokesperson. “We believe that these measures will contribute to a safer and more resilient financial system for all Europeans.”

Effective Date

The new regulations come into effect today, following their publication in the Official Journal of the European Union yesterday.