Basic principles and objectives of banking resolution

Basic principles and objectives of banking resolution

The main principles supporting the current resolution framework are:

  1. Avoiding prejudicial effects on the stability of the financial system, preventing the spread of difficulties from one institution to the whole system.
  2. Guaranteeing the continuity of activities and services provided by those institutions when their interruption could affect the provision of essential services for the real economy and financial stability.
  3. Ensuring the most efficient use of public resources, minimizing public financial support, whereby shareholders and creditors or, as the case may be, the industry, take on any losses.
  4. To this end, Law 11/2015 defines both the internal mechanisms for shareholders and creditors to absorb the losses of an institution resolution (the bail-in instrument), as well as the establishment of a national resolution fund financed by contributions from the investment funds that do not already contribute to the SRB, as well as the branches in Spain of credit institutions and investment firms established in third countries.

  5. Protecting depositors whose funds are guaranteed by the Deposit Guarantee Fund and investors who are covered by the Investment Guarantee Fund.