After a credible resolution, one should assume that the emergency has been dealt with and that ELA is no longer needed. That’s why we need to address this elephant in the room. We need to tackle the issue of funding in resolution. New instruments may be needed.
We can’t assume that with their limited resources, the central bank or resolution fund will fully take care of funding in and immediately after resolution. Even a well-recapitalized bank may experience increased liquidity needs generated by market volatility, and by asymmetrical information on the bank’s viability.