Countries Preparing For Bail-Ins

Posted at 9:44 AM (CST) by & filed under General Editorial.

Hi Jim,

Why does everyone seem to think that Canada, Cyprus and New Zealand are the only countries preparing for bail-ins?

CIGA Janice

Basel Committee on Banking Supervision
Report and Recommendations of the Cross-border Bank Resolution Group

Click here to read the full report…

This is the policy that the central banks are following. Check out the list of central banks consulted on the formulation of this – last page. The Fed is represented, so it should not have come as a surprise to Mr B. or was it the tilt of the cards that provoked the “angry” reaction?

Underlining is mine in the below quote.

Recommendation 10

National authorities should adopt crisis management and resolution strategies that reduce moral hazard by minimising public expenditures. Losses should be allocated among shareholders and other creditors, where possible; and private sector resolutions rather than public ownership should be facilitated. Where temporary public ownership is necessary, authorities should seek to return assets to private ownership and management as soon as possible. At the time of public intervention, national authorities should seek to develop public understanding about the amount of fiscal support that may be necessary, estimates of the time horizon for intervention, risk sharing arrangements and the possible losses borne by the taxpayers.

SIGNATORIES to the document which proposes that creditors of financial organizations, the depositors, carry responsibility to "bail in" bankrupt organizations.

  • Members of the Cross-border Bank Resolution Group
  • Swiss Financial Market Supervisory Authority
  • Federal Deposit Insurance Corporation Banco Central de la República Argentina National Bank of Belgium
  • Commission bancaire, financière et des assurances, Belgium Banco Central do Brasil
  • Office of the Superintendent of Financial Institutions, Canada Commission Bancaire, France
  • Deutsche Bundesbank
  • Bundesanstalt für Finanzdienstleistungsaufsicht, Germany Banca d’Italia
  • Bank of Japan
  • Financial Services Agency, Japan
  • Commission de Surveillance du Secteur Financier, Luxembourg De Nederlandsche Bank
  • Banco de España
  • Sveriges Riksbank
  • Swiss National Bank
  • Swiss Financial Market Supervisory Authority
  • Bank of England
  • Financial Services Authority
  • Board of Governors of the Federal Reserve System Federal Reserve Bank of New York
  • Office of the Comptroller of the Currency
  • Office of Thrift Supervision
  • Federal Deposit Insurance Corporation
  • European Commission European Central Bank (ECB)
  • Financial Stability Board
  • Offshore Group of Banking Supervisors
  • Bank for International Settlements
  • Financial Stability Institute
  • Secretariat, Basel Committee on Banking Supervision

Dear Janice,

The backpedalling and denials which have emanated from just the same bodies that signed on to this Cyprus template is because it was used in Cyprus, revealing its existence ahead of time. This was constructed for the next large banking problem and not for slamming an island tax shelter like Cyprus. Here is the undeniable template to confiscate deposits with legal grounds. Clearly if this was expected by any public, few would carry large balances in any bank. This should answer clearly the question, can central planners do really stupid things at just the wrong time and wrong targets?

Respecfully,
Jim