CEPR Working Paper: Rules versus Discretion in Bank Resolution

Author(s): Lucy White and Ansgar Walther Date: October 2019 Abstract: Recent reforms give regulators broad powers to “bail-in” bank creditors during financial crises. We analyze efficient bail-ins and their  implementation. To preserve liquidity, regulators must avoid signaling negative private information to creditors. Therefore, optimal bail-ins in bad times depend only on public information. As a[…]