Banking Crises: Prevention, Treatment and Resolution

Thierry DISSAUX Président du directoire, Fonds de garantie des dépôts.

Jean-François LEPETIT Ancien président, Conseil des marchés à terme (CMT), Conseil des marchés financiers (CMF), Commission des opérations de Bourse (COB), Conseil national de la comptabilité (CNC) ; administrateur, BNP Paribas.

This article advocates for a selective approach of the various instruments currently under scrutiny by the international financial community for the prevention, treatment and resolution of systemic banking crises. With the objective of providing banking supervisors with a broad and powerful instrument which, at the same time, would not unnecessarily impede banking activities, Jean-François Lepetit and Thierry Dissaux recommend that resolution authorities use primarily “statutory bail in”, limited to credit institutions’ senior debt, for high-loss absorbency purposes.

Besides this, they insist on the need for a global approach of all measures presently contemplated to prevent and handle systemic risks. They also underline that France should quickly put in place the instruments that will allow an early identification of systemic risks and systemic activities going forward.