EU regulatory proposal on the treatment of liabilities of uncertain existence, timing or amount in a bail-in scenario

Abstract

The ongoing reform of the European Union’s bank crisis management framework addresses the treatment of liabilities of uncertain existence, timing or amount in a bail-in scenario, with the aim of improving clarity with respect to existing law and, consequently, increasing legal certainty. The reform process has revealed that there have been different approaches to this issue. The option that, as agreed in the trilogues, is expected to be finally approved should be viewed positively, because it gives preference to the need to pay attention to the special nature and features of liabilities of uncertain existence, timing or amount, despite the instrumental importance of their accounting treatment. However, the existence of different approaches to designing the reform has led to a regulatory proposal that is probably unnecessarily complex. In other words, the final result is positive, but it could perhaps be achieved more easily and with some technical improvement, as explained in the conclusions.