Building trust to prevent banking crises

Abstract

Banking crises are a feature of the modern financial system. However, their impact and probability can be mitigated by building trust in the banking sector. This is primarily achieved by banks themselves. However, with vigilant ex-ante monitoring and swift and decisive action when a banking crisis emerges, regulators can shore up trust in the banking sector. The Single Resolution Board, as the banking union’s central resolution authority, is a key element of the post-global financial crisis regulatory framework and has been promoting trust in the banking sector by making banks more resolvable.