That said, we must keep in mind that the BRRD is a new and untested framework for failing banks, and it is not particularly suited to addressing a systemic crisis. As it will be revised by June 2018, we will have to closely monitor its implementation and identify any areas where adjustments and fine-tuning will be needed.
While we may need tools for failing banks, our primary aim as supervisors is the prevention of bank failure, in order to foster financial stability and ensure that depositors remain protected. As John Vickers (2016) recently highlighted “Orderly bank failure is better than disorderly failure, but it’s best not to fail in the first place…Regulators… are adding usefully to the supply of fire extinguishers.