Financial stability analysis in banking resolution | seminar with Kristian Kjeldsen | EUI, Florence, 28 February

This professional and research seminar led by Kristian Kjeldsen, head of financial stability at the Single Resolution Board (SRB) was intended to inform the EUI community about the role and activities of the SRB.

Held in the conference room ground floor at Villa La Fonte on 28 February between 15:00-16:30, the seminar:

  • informed the EUI community about the role and activities of the SRB;
  • notified interested EUI PhD researchers about the type of professional opportunities that the SRB might offer in the future;
  • gave a more expert exchange in a smaller circle with scholars interested in discussing the emerging and promising issue of ‘financial stability analysis in resolution’.

On Financial Stability Analysis in Banking Resolution:

Assessing the impact on financial stability of sending banks into resolution is very important. One of the key channels of financial instability is the indirect contagion to other banks when a bank is in trouble. In order assess properly the indirect channel of contagion, there are a number of areas for research:

  • Applying and estimating the right econometric models (for example, Vector Autoregressive models) to perform an impulse response analysis of the possible impact on senior debt price spreads for other banks and the sovereign debt.
  • Identifying empirically the early warning indicators for when a bank’s situation deteriorates and understanding how they behave before and after the setting up of the common resolution regime within the Banking Union.
  • Developing the right tools to analyse market based data from illiquid financial markets.

On Kristian Kjeldsen:

Kristian Kjeldsen is the recently appointed Head of the Financial Stability Unit at the Brussels-based Single Resolution Board (SRB). Previously he spent 20 years at Danmarks Nationalbank, most of the time as Head of Payment Systems and as an adviser in the Financial Stability Department. Before joining the Danish central bank, he worked for three years at the European Investment Bank in the Chief Economist Office. He has a Ph.D. from the Institute of Finance, Copenhagen Business School, and benefitted tremendously from his stay at the EUI in 1990s while writing his thesis.

On the Single Resolution Board:

The SRB is the central resolution authority within the Banking Union. Together with the National Resolution Authorities of the participating Member States it forms the Single Resolution Mechanism (SRM), which applies to banks under the remit of the SRB. As the second pillar of the Banking Union, the purpose of the SRM is to ensure an orderly resolution of failing banks with minimal costs for taxpayers and to the real economy. The SRM regulation establishes the framework for the resolution of banks in EU countries participating in the banking union.

More information available on the SRB website.