The Reserve Bank has published its regulatory impact assessment of pre-positioning for Open Bank Resolution (OBR). The Reserve Bank is proposing to implement its OBR policy so that formal resolution arrangements can be put in place in advance of a bank failure. OBR would allow a statutory manager to temporarily close a failing bank, place a freeze on a proportion of unsecured liabilities and re-open for transactional business the next day.
The regulatory impact statement contains a summary of the resolution options considered by the Reserve Bank - status quo (including adoption of Basel III to strengthen the resilience of banks), significantly enhanced capital requirements, living wills and OBR - and the Reserve Bank's assessment of these options and preferred approach.
A copy of the regulatory impact statement is available here. Those with an interest in this topic may also want to read the speech by the Deputy Governor, Financial Stability of the Bank of England, providing an update on progress of the Financial Stability Board's work on the resolution of distressed financial institutions. A copy of the speech is available here.