Recovery and resolution for non-banks
Building a safer financial system
Recovery and resolution is one of several key international work streams aimed at addressing the risks posed by global systemically important financial institutions (G-SIFIs). The intention of a recovery and resolution framework is to reduce the likelihood of a G-SIFI failing in the event of financial distress through advanced planning and direct intervention by regulatory authorities. Globally, the regulatory focus to date has been on banks.
However, regulators are now turning their attention to the potential risks non-bank financial institutions could pose to the financial system and the broader economy, and the regulatory solutions that should be applied to address those risks.
In this paper, we provide an overview of the first European Commission consultation on non-bank financial institutions (published October 2012) and outline the early regulatory thinking around the issue of recovery and resolution, first for Financial Market Infrastructure (FMI), and then for insurers. Although the focus is on the EU, the briefing is set within the UK and international context.
Please note, the paper’s content page is hyperlinked to allow readers with a particular interest in the insurance sector or FMI firms to navigate directly to the relevant pages.