As a result, the distinction between liquidity and solvency, and the ensuing impact on the sharing of the costs of the operation, would remain opaque. Moreover, host country supervisors would not have the incentive to provide liquidity support because funds could flow back from a troubled branch to the parent company due to EU ring-fencing prohibitions.
On the other hand, home-country authorities might delay providing information or taking crisis-management actions to avoid capital losses, reputational effects or political backlashes. So the home authority would not always have the incentive to keep smallcountry host authorities informed in an acceptable way. In turn, host country authorities would seek to retain as much intervention authority as possible. I beg to disagree.