By Andrew Gracie, Executive Director, Resolution, and Lucy Chennells and Mark Menary of the Bank’s Resolution Directorate.
The Bank of England has an objective to protect and enhance UK financial stability, as part of which firms must be able to fail without destabilising the rest of the financial system. Resolution is the process by which the UK financial authorities can intervene to manage the failure of a firm in an orderly way. The aim is to ensure continuity of the critical economic functions and services provided to customers, and that the costs of failure are borne by shareholders and unsecured creditors rather than taxpayers.
The Bank of England’s approach to resolving failed institutions