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Minimum Requirement For Own Funds And Eligible Liabilities (MREL) - Policy And Regulation

Effective bank resolution can be feasible and credible if adequate internal financial resources are available to an institution to absorb losses and for recapitalisation purposes without affecting certain liabilities. The latest financial crises highlighted the limitations of the that time existing regulatory framework to handle a bank failure without public money. New legislation for bank crisis management in European Union was designed: The Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR). The BRRD sets the key criteria for Minimum Requirement for own funds and Eligible Liabilities (MREL). MREL represents one of the key tools in enhancing banks’ resolvability. It is developed by The Single Resolution Board to ensure that a bank maintains at all times sufficient eligible instruments to facilitate the implementation of the preferred and, where applicable, variant resolution strategies. For big, systemically important banks, the robust and transparent Minimum Requirement for on funds and Eligible Liabilities (MREL) framework is of utmost importance. This paper analyses the structure and the ultimate objectives of the MREL policy. Also it analyses the latest revisions of the regulatory framework for MREL policy under the Banking package (BRRD2/SRMR2).

Minimum Requirement for Own Funds and Eligible Liabilities (MREL), The Single Resolution Board (SRB), The Banking Union, the Single Resolution Mechanism Regulation (SRMR),

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