The Financial Stability Board (FSB (Financial Stability Board)) found evidence in market data that implicit funding subsidies have indeed declined since the implementation of resolution reforms – but are not yet negligible. [14] This suggests that resolution regimes are not perceived as being fully credible in the eyes of market participants.
Resolution regimes need to be not only operational on paper, but also credible in practice. During a crisis, it ultimately requires political will to implement rules and plans that were made ex ante. Removing obstacles to resolution can tilt the balance and enhance credibility.