24/07/2013:
EU bank resolution post-Cyprus.
In: CayCompass.com
Since the collapse of Lehman Brothers five years ago, authorities have been grappling with the question of how systemically important banks, which are too big to fail (TBTF), can be recapitalised without using taxpayer money or causing bank runs. Besides imposing heavy costs on taxpayers, publicly funded bailouts give rise to moral hazard by generating expectations of government support.