The feasibility of single-point-of-entry recapitalization will depend on banks holding sufficient loss-absorbing, long-term debt. However, an incorrectly calibrated or unduly narrow requirement could be counterproductive and make SPOE more difficult.
Single point of entry places bank holding companies as the source of strength for insured depositories and nonbank affiliates. As a result, a range of regulations may be redundant or have unintended cumulative effects. The current state of regulation should be carefully analyzed to avoid constraining economic growth.
While single point of entry may be a preferred resolution strategy for certain banks, multiple point of entry may be more appropriate for those banks with a significant global footprint and many subsidiaries.
Though there is widespread agreement on the need for a viable resolution framework, overlapping authorities and legal confusion stand in the way of a cohesive approach. Regulators, banks, and other stakeholders must work together to craft a globally-viable resolution regime before it’s too late.