Media - News
CBFL Distinguished Visitor Lecture: Bank Resolution for Financial Stability in the European Banking Union by Dr. Karl-Philipp Wojcik, General Counsel of the Single Resolution Board
On 3 February 2025, the Centre for Banking and Finance Law (CBFL) was pleased to welcome Dr. Karl-Philipp Wojcik, General Counsel of the Single Resolution Board (SRB) to present the CBFL Distinguish Visitor Lecture. Associate Professor Christian Hofmann, Deputy Director of CBFL, moderated the lecture titled “Bank Resolution for Financial Stability in the European Banking Union”.
The distinguished visitor lecture was delivered in Dr. Wojcik’s personal capacity and do not represent the official views or opinions of the SRB or any European Union (EU) organ. Dr. Wojcik spoke on the EU’s response to the financial crisis, on the framework created in the wake of the financial crisis, namely the Single Resolution Mechanism and the EU Banking Area, and finally on some extant challenges, drawn from more recent crises, including the Credit Suisse and Sberbank experiences.
Dr. Wojcik’s broad thesis was that effective and predictable banking resolution rules are essential for ensuring prosperity and welfare. Political stability depends on economic stability, which in turn depends on financial stability and stable banking systems. These support a prosperous and innovative society. The work of the SRB, in his view, was therefore to support these larger goals and objectives of prosperity and welfare.
Dr. Wojcik spoke of the societal costs of bailouts, most notably seen in the recent financial crisis. Normal insolvency procedures could not work for big banks as, among others, they were not fast enough and destroyed value. The problem of financial institutions being too big to fail had significant societal costs not least in the distortion of competition and the creation of moral hazard. He went on to speak of the role of the SRB which, like CBFL, was created in 2014. He then went on to highlight the SRB’s role in the four phases of bank failure, namely the preparatory phase, the early intervention phase, the resolution phase, and the implementation phase. Broadly speaking, the SRB has more power in each subsequent phase. A key aspect of banking resolution is being prepared. In the words of Eisenhower, “plans are useless, planning is essential.”
Throughout these phases, the SRB has three fundamental policy choices, shared Dr. Wojcik. These are a clear preference for internal funding, limiting (or eliminating) external funding using taxpayer money (bailouts), and providing external funding instead of taxpayer money with potential industry involvement. On the lessons drawn from recent crises handled by the SRB, it was found that swift action does restore stability but at the same time flexibility in the handling of the resolution process was essential. A takeaway from these is that the new resolution system in the EU does work and the sale of business and bail-ins are generally effective.
The lecture held at the Wee Chong Jin Moot Court was well attended by academics, practitioners, and regulators alike. Dr. Wojcik then went on to answer questions raised by the participants on the functioning of the SRB and aspects of cooperation and national politics. There were also questions regarding Central Bank Digital Currencies and their implications on resolution scenarios.
Dr. Wojcik’s profile may be found here.
The Centre for Banking and Finance Law was launched on 12 September 2014. To find out more about other CBFL events, including those in the 10th Anniversary Seminar Series, please click here.
