Financial Institutions in Distress: Recovery, Resolution, and Recognition

Inevitably, on the other hand, at least some such institutions will occasionally act imprudently, one of the most projects in which such funds are deployed may be unwise, and other such projects can suffer from unforeseen circumstances. On account of such factors, a financial institution may suffer distress in one country, and may then transmit such distress to other countries in which it operates. The efficacy of any response to such cross-border transmission of distress may turn on the response being given
due effect in both (or all) the territories in which the distressed financial institution operates. This situation creates a conundrum for policymakers, legislators, and regulators who need to enable those subject to their jurisdiction to access some great benefits of cross-border financial intermediation,
yet cannot make rules and regulations that would have effect outside that jurisdiction.

This book explores this conundrum and offers a response. It does so by drawing on and adding to the literatures on financial intermediation, regulation, and distress, and on existing hard and soft laws and regulations. The book advocates for the creation of a model law that would address the full range of financial institutions, including insurance companies, and that would enable relevant authorities to cooperate with counterparts in advance of the onset of distress and to give appropriate
effect in their jurisdiction to measures taken by counterpart authorities in other jurisdictions in which the distressed institution also operates.