Also, adequate common backstop arrangements need to be established, both for the transition period and the steady state, to guarantee the credibility of the SRF and avoid a persistent or re-emergent sovereign-bank nexus. Finally, the assessment whether a bank is failing or likely to fail should solely be in the hands of the supervisor.
This also includes information on the policy direction in the real sector, how to build the understanding and capacity of banks in assessing risk, and how to improve legal certainty in the resolution of problem loans in order to reduce the negative impact of the cost of problem loans on the risk perceptions of banks.