The Complementarity between Financial Supervision and Crisis Resolution: A Gap in the EU Framework at the Time of the Crisis

Leonardo Giani

After surveying some leading cases that have occurred in the past few years, this article claims that the systems of financial supervision and the legal tools developed to handle the failure of banks should be viewed as two complementary elements; therefore they should be elaborated consistently. In the light of this complementarity, this article proceeds by describing the main features of the supervisory framework and the regulations on the subject of banks' insolvency in force at the EU level at the time of the crisis. In view of these descriptions, this article concludes by showing that financial supervision and crisis resolution were not designed at the EU level as two complementary activities, arguing that several challenges faced by the Member States in dealing with the insolvency of banks during the crisis were due to this circumstance.

Law and Financial Markets Review, Vol. 4, No. 4, July 2010: 421-427.

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