Cross border resolution issues for systemic institutions: what are the main remaining challenges, what possible path to address them?

Three types of frictions in a cross border context are identified: economic and prudential frictions, legal frictions and operational issues. Solutions are suggested to reduce each of them: credible and relevant resolution scenarios for operational resolution plans and credible guarantees to reduce economic and prudential frictions. Legal frictions could be reduced by implementing contractual or statutory recognition of rights of EU authorities in third countries and resolution actions of third country entities with subsidiaries or significant branches. Then, by deepening the cooperation and exchange information within fora such as Crisis Management Groups (CMG) and EU resolution colleges, operational issues such as execution risk can be further understood and reduced.

If this paper focuses on further EU resolution issues, its reasoning and conclusions should be considered in a broader way, and address cross border resolution issues for systemic institutions.