The backstop for the Single Resolution Fund The ESM Treaty is also being revised to address the need for a backstop to the Single Resolution Fund (SRF), namely the option of supporting the SRF should its resources prove insufficient to finance the measures it must take.
Under the current European bank crisis management framework, the main function of the SRF, managed by the Single Resolution Board (SRB), is to finance the application of resolution tools while minimizing the use of public resources.5 In addition, if needed to avoid contagion risk, the SRF will also be able to absorb the losses directly and help recapitalize the bank under resolution, for a maximum amount equal to 5 per cent of the bank’s liabilities and only after a bail-in equal to at least 8 per cent of the same liabilities.