The news said that the legislation to put in place a special resolution regime for banks and give the governor of the Central Bank the power to intervene in their affairs. In December 2010, the government promised to publish the law by the end of February and said it would broaden the available resolution tools with the aim of promoting financial stability and protecting depositors. The new law will be used to intervene in the affairs of distressed financial institutions and will replace the Credit Institutions Act.
The legislation was contained in the agreement between the government and the EU-IMF. The EU-IMF deal with the Government said legislation on improved procedures for early intervention in distressed banks and a special bank resolution regime (SRR) would be introduced. “The SRR should include a robust set of powers and tools to ensure the competent authorities can promptly and effectively resolve distressed banks, e.g. when they pose a risk to financial stability. The legislation will be consistent with the EU treaty rules and will be consistent with similar initiatives ongoing at EU level,” the agreement stated.
The UK have been introduced bank resolution legislation in February 2009, however, the absence of such legislation in most jurisdictions seemed it have widely hindered governments’ efforts to deal with distressed banks and the financial crisis.
The Credit Institutions Bill was published and enacted within a week in December. At that time, the minister for finance Brian Lenihan said that a key pillar of the EU-IMF agreement was comprehensive restructuring of the retail banking system. The law, he said, would allow him take actions needed to bring about a domestic retail banking system that is proportionate to and focused on the economy.
http://www.irishtimes.com/newspaper/finance/2011/0228/1224291007031.html
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