Central Bank of Italy – Eurosystem publishes: The FDIC bank crisis management experience: lessons for the EU Banking Union

BlueVal’s Partner Andreas Dal Santo is the co-author of a paper released by the Central Bank of Italy (Banca d’Italia) titled “The FDIC bank crisis management experience: lessons for the EU Banking Union.” The paper describes the responsibility of the US Federal Deposit Insurance Corporation (FDIC) and the European insolvency framework. It posits that the FDIC's accumulated experience in bank failure management makes this institution a point of reference in the ongoing debate on possible reforms of the European Union bank crisis management framework and deposit insurance scheme. The note analyzes the US regulatory framework and the FDIC experience. It highlights four factors that explain the FDIC superior performance when compared to that of the European Banking Union: (a) the concentration of different functions into one authority; (b) the presence of a single framework for banking resolution flexibly applicable to all banks, regardless of their size; (c) the possibility to use the deposit insurance fund to protect also uninsured deposits, under the least cost principle, when - as part of purchase & assumption transactions - it allows for a reduction of fund disbursements; (d) the absence of antitrust constraints.

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