However, there may also be reasons why the BRRD, adopted at the end of last year, gives countries the option of departing from the directive’s strict liability cascade in cases where financial stability is under threat.
This is possible, for instance, by exempting certain liabilities or by permitting the use of public funds in the context of a “Government Financial Stabilisation Tool” as a last-resort measure. However, the market can only impose discipline on the banks in full measure if such exemptions are tightly restricted. 3.