This chapter applies the theoretical framework on debt governance and regulation developed in Chapter 2 to the new EU recovery and resolution framework for failing banks. Both the legal and economic literature have overlooked the relationship between bank resolution and bank governance. The existing studies mainly focus on the potential of long-term creditors to correctly price bank debt and the impediments to such possibility, highlighting the lack of credibility of the resolution framework. This chapter widens the scope of the analysis, linking debt governance to the resolution framework, discussing the incentives stemming from such a framework, and proposing governance regulation as a tool to enable debt governance in banks. The first part of this chapter focuses on the regulatory framework, positioning it in the path towards the European Banking Union. Thereafter, this chapter proceeds to the discussion of the economic rationale and the legal design of the recovery and resolution framework, focusing on the bail-in tool. The analysis shows that on top of its several shortcomings, the Bank Recovery and Resolution framework could, almost inadvertently, represent an effective medium between substantive regulation and governance incentives. The analysis zooms in on the incentives stemming from the resolution tools, discussing the expectation it is supposed to ingenerate ex-ante on corporate actors. This allows for the establishment of a clear link between the ex-ante potential of the BRRD and debt governance. This chapter is structured as follows. Section 1 sets the stage for the analysis. Section 2 puts the BRRD into context, briefly describing the main post-crisis reforms on banking regulation and the path towards a European Banking Union. Section 3 presents the main features of the Directive, shortly analysing its main tools and hinting at the vulnerabilities of the resolution framework highlighted by the previous literature, particularly the issue of the credibility of resolution. Section 4 discusses the relationship between the credibility of the resolution framework and debt governance. Section 5 makes the case for the ex-ante potential of the resolution framework, focusing on the specific case of the role of debtholders in corporate governance. This section explains why bail-inable debtholders should play a positive role in governance and the legal and material obstacles impeding them from playing such a role taking the law as it is. Section 6 concludes.

The EU Bank Resolution Framework and Its Ex-ante Potential

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发表日期：

2026年

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Edoardo D. Martino

摘要

This chapter applies the theoretical framework on debt governance and regulation developed in Chapter 2 to the new EU recovery and resolution framework for failing banks. Both the legal and economic literature have overlooked the relationship between bank resolution and bank governance. The existing studies mainly focus on the potential of long-term creditors to correctly price bank debt and the impediments to such possibility, highlighting the lack of credibility of the resolution framework. This chapter widens the scope of the analysis, linking debt governance to the resolution framework, discussing the incentives stemming from such a framework, and proposing governance regulation as a tool to enable debt governance in banks. The first part of this chapter focuses on the regulatory framework, positioning it in the path towards the European Banking Union. Thereafter, this chapter proceeds to the discussion of the economic rationale and the legal design of the recovery and resolution framework, focusing on the bail-in tool. The analysis shows that on top of its several shortcomings, the Bank Recovery and Resolution framework could, almost inadvertently, represent an effective medium between substantive regulation and governance incentives. The analysis zooms in on the incentives stemming from the resolution tools, discussing the expectation it is supposed to ingenerate ex-ante on corporate actors. This allows for the establishment of a clear link between the ex-ante potential of the BRRD and debt governance. This chapter is structured as follows. Section 1 sets the stage for the analysis. Section 2 puts the BRRD into context, briefly describing the main post-crisis reforms on banking regulation and the path towards a European Banking Union. Section 3 presents the main features of the Directive, shortly analysing its main tools and hinting at the vulnerabilities of the resolution framework highlighted by the previous literature, particularly the issue of the credibility of resolution. Section 4 discusses the relationship between the credibility of the resolution framework and debt governance. Section 5 makes the case for the ex-ante potential of the resolution framework, focusing on the specific case of the role of debtholders in corporate governance. This section explains why bail-inable debtholders should play a positive role in governance and the legal and material obstacles impeding them from playing such a role taking the law as it is. Section 6 concludes.