on bank resolution, and in the policy panel on banking crises in the afternoon. as is well known, the response to the global financial crisis also addressed the regulatory landscape for bank recovery and resolution. in europe, the substantial costs of the public recapitalisation of banks in many countries motivated the introduction of a new bank resolution framework ( bank recovery and resolution directive, brrd ), which increases the burden of losses borne by the private stakeholders of institutions in distress, with the aim of reducing the cost for taxpayers. the use of bail - in tools as a general principle is certainly welcome as long as it is expected to reduce banks ’ risk - taking incentives and to reduce distortions to competition associated with too - big - to - fail market perceptions. yet, when it comes to the specific use of the brrd, the old saying of “ the devil is in the detail ” remains valid, as witnessed by the inadequacies of the new framework that emerged during recent cases of bank crisis. as i have mentioned on other occasions, the use of public funds could be less restrained to avoid financial stability risks and economic disruptions that may be caused by a routine recourse to private burden sharing. of course, this is not to say that, in the different forms that banks ’ resolution and liquidation may take, shareholders should not bear the cost of the resolution or the liquidation, administrators and managers should not be removed, or careful recovery plans should not be required. but i am still worried that the straightforward application to banks of the insolvency proceedings normally applied to non - financial companies could lead to unintended consequences, via confidence disruption and contagion, to the rest of the system and to the real economy. and i believe that the issue of how to resolve banking crises in the european banking union in an orderly, quick and efficient manner, also given the difficulty of effectively coordinating all the authorities and institutions involved, still needs to be satisfactorily addressed. this is not to dispute that a well - thought out implementation of bail - in procedures or a proper application of state aid rules in the case of well identified threats to market competition would not be useful. however, theoretical and empirical research should foster a better understanding of the conditions under which a bailin approach is socially optimal. in - depth empirical analysis of the impact of the current implementation of the brrd on the banking sector and on the real economy is of the utmost importance. the development of effective analytical tools to

ex ante may not be so easy. supervisors adopt a risk - based approach to apportion resources to the various tasks and intermediaries ( i. e., they increase resources where they see higher risks ), but the exercise is a probabilistic one, which can be defied by reality. some problems can be detected too late, or not at all. second, even when the problem is detected at an early stage, it can be difficult for the supervisor to adopt successful remedial actions if the bank is not responsive. typically, see federal deposit insurance corporation, fdic ’ s supervision of signature bank, 28 april 2023 ; fdic ’ s supervision of first republic bank, 8 september 2023 ; board of governors of the federal reserve system, review of the federal reserve ’ s supervision and regulation of silicon valley bank, 28 april 2023 ; government accountability office, bank regulation : preliminary review of agency actions related to march 2023 bank failures ( gao - 23 - 106736 ), 28 april 2023 ; basel committee on bank supervision, report on the 2023 banking turmoil, october 2023 ; report of the expert group on banking stability, the need for reform after the demise of credit suisse, 1 september 2023 ; swiss national bank, financial stability report, 2023 ; p. hernandez de cos, reflections on the 2023 banking turmoil, 14 september 2023. this includes but is not limited to : the composition of the board and the extent to which its members have relevant experience, including banking and financial expertise ; the board ’ s ability to effectively challenge the bank ’ s management, oversee the bank ’ s risk profile and steer its strategy ; the independence and empowerment of the risk management and internal audit functions ; adequate safeguards to identify and eventually mitigate possible conflicts of interest, the enterprise - wide risk culture, including how embedded it is in corporate and business processes ; and the incentives provided by senior management compensation schemes. see board of governors of the federal reserve system, cit. ; report of the expert group on banking stability, cit. supervisors adopt more and more intrusive measures in a proportionate fashion, gradually increasing pressure as the situation deteriorates. in principle, stark decisions should be taken well before a bank breaches regulatory requirements and reaches the point of non - viability. in its report on the recent crises, the government accountability office argues that us regulators had been recommended years before to add noncapital