Report: Analysis of the Proposal to Amend Moratorium Powers: 13 April 2018

On 23 November 2016, the European Commission published a package of reforms proposing fundamental changes to E.U. legislation on bank resolution and bank capital.  One proposed amendment introduced additional moratorium powers giving relevant authorities new abilities to suspend payment or delivery obligations pursuant to any contract to which an institution in resolution is party.

In this paper, entitled Bank Recovery and Resolution Directive: Legal Uncertainties in the Proposal to Amend Moratorium Powers, the FMLC highlights legal and practical risks which arise in the context of these amendments in relation to existing moratorium powers, internationally-agreed standards for financial netting and collateral arrangements, requirements within other E.U. regulations for depository holding, and back-to-back contracts in cleared derivatives transactions.

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