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Title: Who pays for failing banks: Hong Kong’s Financial Institutions (Resolution) Ordinance (FIRO)
Issue Date: 30-Dec-2019
Publisher: Sweet & Maxwell Ltd
Citation: CHRISTIAN HOFMANN (2019-12-30). Who pays for failing banks: Hong Kong’s Financial Institutions (Resolution) Ordinance (FIRO). Hong Kong Law Journal 49 (3) : 905-925. ScholarBank@NUS Repository.
Abstract: Failing systemically important financial institutions are different from other business entities. Their collapses come with serious risks for the financial system and wider economy and require swift and vigorous reactions from expert authorities. Like other financial centres, Hong Kong responded to these realities and introduced a specific resolution regime for failing financial institutions. The Financial Institutions (Resolution) Ordinance (Cap 628) (FIRO) prepares institutions and authorities for worst-case scenarios and vests far-reaching powers in resolution authorities to respond forcefully to collapses of financial institutions. This article analyses the new rules. It looks at the powers vested in the Hong Kong Monetary Authority in its role as the resolution authority for banks, the rules for bail-ins of liabilities and the recapitalisation options. It argues that FIRO is fully compliant with the recommendations of the Financial Stability Board and that Hong Kong deserves recognition for having chosen an approach to resolution that not only adopts many principles from the European Union, the global frontrunner in resolution legislation, but also deviates from the EU’s overly rigid rules if necessary. At the same time, it disagrees with the design of the resolution fund in the FIRO and proposes changes.
Source Title: Hong Kong Law Journal
ISSN: 03780600
Appears in Collections:Staff Publications

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