Overview There is an EU-wide directive on bank recovery and resolution designed to resolve issues with failing banks without the use of taxpayers’ money. This legislation applies to credit institutions established in Ireland, including subsidiaries of EU credit institutions. Shareholders and bank creditors, except for protected depositors, may potentially lose part of their funds held by the bank. The Central Bank has authority in Ireland […]
Bank Stability Bank stability is absolutely critical to an economy. Banks are usually private organisations, whose principal purpose is making profits for shareholders. From the late 1980s forward, banks diversified into a wide range of financial services products. Various sections of banks engaged in more complex merchant banking-type transactions. Historically, banks funded their loans through retail deposits. However, following the introduction of the euro and […]
Wholesale Markets Over the last 30 to 40 years, there has been much greater level of intermediation in relation to savings and money markets. Most banks are unable to fund more than half of their lending from deposits. They accordingly need to source monies on money markets from other banks and through other intermediaries by whom monies and money like (highly liquid investments) are held. […]
Netting Netting is a crucial protection against default. Close-out netting applies on the occurrence of an event of default. All transactions under a single master agreement are accelerated and terminated, and a single net sum is payable by one party to the other. Accordingly, insolvency is a risk only in respect of the net amount due and not the gross amounts due. Ireland’s Netting of […]