Safe-to-Fail Experiments

Abstract

Examines the use of a pre-pack reorganisation to make banks resolvable, or "safe to fail". Considers the two key elements of the pre-pack reorganisation, the conditions to be met for an institution to be safe to fail, the resolution timetable and the key challenges arising, in particular the implementation of the bail-in and the arrangement and execution of the liquidity facility for the bank in resolution. Discusses the steps to be taken by policymakers and banks to reach resolvability.