The need (or not?) for an ex ante resolution fund: a comparative analysis

One of the key EU-level responses to the 2007-09 financial crisis was the Bank Recovery and Resolution Directive 2014/59/EU (BRRD), which put in place a new and comprehensive system for dealing with failing banks and which aimed to enhance stability, reduce moral hazard and, most importantly, put an end to publicly funded bail-outs. This article contributes to the literature on the public v. private debate of financing banking crises by analysing the decision of the UK Government to derogate from the requirement in the BRRD for Member States to build an ex-ante resolution fund via contributions from the private banking sector. A comparative approach is adopted which analyses the practices of Member States in imposing bank levies in the post-crisis climate, with a focus on whether they contribute either ex-post to the general economy (the approach taken in the UK), or ex-ante to a designated resolution fund (the approach taken by Member States operating within the Eurozone). In doing so, this article identifies the potential impact of the decision on the management of future banking crises in the UK, addressing in particular whether it will be the public or private sector that bears the cost.