Preparing for the Next Financial Crisis

Beyond the supervision of nancial institutions in “ordinary” or “normal” times,

the continuity of the provision of nancial services in crisis times should also be

ensured. To avoid contagion to other nancial institutions or the wider econ-

omy, when some banks are likely to fail, decisions need to be made regarding the

preservation of banks’ critical functions for the continuing provision of nancial

services, and the possible unwinding of the failing nancial institutions. In this

perspective, the episode of Lehman Brothers’ bankruptcy in 2008, as well as

public interventions in 2007–2008, has highlighted the need to better manage

the situation of banks, the failure of which may have a systemic impact. This was

the motivation for refor ...