NOTE NUMBER 336 75209 viewpoint PUBLIC POLICY FOR THE PRIVATE SECTOR FINANCIAL AND PRIVATE SECTOR DEVELOPMENT VICE PRESIDENCY JANUARY 2013 Resolution Regimes David Scott Dealing with Failing Financial Institutions David Scott (dscott@world I n re sp onse to t he f ina nc ia l c r is is in d e v e lo p e d c o unt r ie s , t h e G - 2 0 , bank.org) is an adviser in the World Bank’s the Financial St a b ilit y B o a r d , t he B a s e l C o m m it t e e o n B a nk i n g Financial Architecture Sup ervision, and o t he r s t a nd a r d s e t t e r s a r e p ur s uing a n a g e n d a o f and Banking Systems re f orms aime d a t im p r o v ing la ws , p o lic ie s , a nd p r o c e d ur e s fo r Unit. He represents the World Bank in the re solving troub le d a nd f a iling f ina nc ia l ins t it ut io ns . T he s e re f o r m s Financial Stability Board’s of f e r conce p ts tha t d e s e r v e a t t e nt io n in t he d e v e lo p ing wo rl d , Cross-Border Crisis Management Group and p articularly f or d e a ling wit h t he s y s t e m ic a lly im p o r t a nt b a n k s a n d other working groups othe r f inancial fir m s t ha t a r e a f e a t ur e in ne a r ly e v e r y c o un t r y . addressing resolution regimes. The global financial crisis that began in 2008 new standard sets out guidance for cooperation demonstrated the potential risk to financial sys- among the supervisory and resolution authori- tems from “too big to fail” financial institutions. ties responsible for significant components of As part of an agenda of reforms to address this firms operating across borders. Assessment of risk, the Financial Stability Board (FSB) agreed this standard will be included in the World Bank on a new international standard for resolution and International Monetary Fund’s Financial regimes for financial institutions. A principal Sector Assessment Program, probably begin- objective is to ensure that the failure of even ning in 2014. large, systemically important financial firms can Complementary work by the Basel Committee be managed without significant financial or eco- on Banking Supervision has focused on the iden- THE WORLD BANK GROUP nomic disruption and without a risk that taxpay- tification of globally systemically important banks ers will have to bear losses. (G-SIBs) for the purpose of requiring these institu- To achieve this aim, the new standard pre- tions to hold higher levels of capital and undergo scribes a range of powers that should be available greater supervisory scrutiny—and is now expand- to resolution authorities in every jurisdiction. It ing this to domestically systemically important also requires recovery and resolution planning banks (D-SIBs). The D-SIB agenda is relevant to for firms that are systemically important to any nearly all developing countries, and its implemen- national economy—to minimize the potential tation will require regulatory policy decisions and that the firms can fail and to increase the poten- adoption of new supervisory practices. tial that the authorities can deal effectively with This Note reviews guidance and standards distress or failure should it occur. In addition, the recently issued by the FSB and the Basel RESOLUTION REGIMES DEALING WITH FAILING FINANCIAL INSTITUTIONS Committee relevant to the resolution of troubled Scope and failing financial firms, particularly systemi- The Key Attributes apply to resolution regimes cally important financial institutions (SIFIs). It for all types of financial firms—including banks, also summarizes recent actions by FSB member insurance companies, securities companies, and authorities to strengthen their capacity and pre- financial market infrastructure firms (payment paredness to resolve such firms. The emphasis is systems, central securities depositories, securities on developments likely to be relevant to develop- settlement systems, central counterparties, trade ing country authorities.1 repositories)—that could be systemically signifi- cant if they were to fail. The scope of coverage also 2 Key attributes of effective resolution regimes includes holding companies of financial firms, The FSB’s new international standard is set branches of foreign firms, and any significant out in its Key Attributes of Effective Resolution operational entities (such as service providers) Regimes for Financial Institutions (FSB 2011), within financial groups, whether or not formally formally endorsed by the G-20 in November regulated. In practice, the Key Attributes are ori- 2011. The following sections describe the range ented mainly to the resolution of banks, and more of powers prescribed by the Key Attributes for specific guidance for insurance companies, secu- resolution authorities (box 1), the resolution rities and investment companies, and financial planning activities that should be undertaken market infrastructure firms is likely forthcoming.3 to reduce the risk of failure and prepare for Some requirements set out in the Key Attributes possible resolutions, and other features of the are mandatory only for firms designated by the Key Attributes.2 FSB as globally systemically important financial institutions (G-SIFIs), at least at this time (see the Box Resolution toolkit 1 The enumeration of a comprehensive and far-reaching set of powers that should be available to all resolution authorities is an important contribution of the Key Attributes. These include the power: Q To remove and replace management and directors and recover money from them Q To appoint an administrator to take control of a firm and manage it Q To take any action necessary to restructure a firm or wind down its operations, including terminating or assigning contracts, purchasing or selling assets, and writing down debt Q To ensure continuity of critical functions by requiring other group companies to continue to provide services to a firm in resolution or by procuring the necessary services from third parties Q To override the rights of shareholders of a firm in order to facilitate a resolution, including any requirement for shareholder approval of transactions Q To establish a temporary bridge institution to take over and operate the critical functions and viable operations of a failed firm Q To establish an asset management vehicle, whether as a subsidiary of the firm in resolution or otherwise, and to transfer to it assets for management, sale, or collection Q To transfer or sell assets, liabilities (deposits, insurance policies), and other rights and obligations to a third party, includ- ing a bridge institution or asset management vehicle, without a requirement for the consent of the counterparty (depositor, policyholder) and without the transfer or sale constituting an event of default or termination Q To reverse any transfer of assets and liabilities to a bridge institution Q To carry out creditor-financed recapitalization (bail-in within resolution) as a means to achieve or help achieve continuity of essential functions Q To temporarily stay the exercise of early termination rights that might otherwise be triggered upon a firm’s entry into resolu- tion or in connection with the use of resolution powers, to impose a moratorium with a suspension of payments to unsecured creditors and customers, and to impose a stay on creditor actions to attach assets or otherwise collect money or property from the firm Q To effect the closure and orderly wind-down (liquidation) of all or part of a firm with timely payout or transfer of insured deposits and prompt access to transaction accounts and to segregated client funds. Source: Key Attributes 3.2–3.4. section on resolution of G-SIFIs). In November a minimum amount of contingent convertible 2011 the FSB designated 29 internationally active or contractual bail-in debt made mandatory at firms as G-SIFIs—firms that because of their size, least for G-SIFIs.6 Some are concerned that the complexity, or systemic interconnectedness potential for unsecured creditors to be bailed in could cause significant disruption to the financial will create incentives for them to try to secure system and economic activity should they fail in their investments with collateral—with the result a disorderly manner. Presently the list includes that a growing proportion of firms’ assets will only banking groups, but it may eventually con- be pledged to wholesale creditors, leaving fewer tain other types of financial groups. assets available to cover deposit liabilities (and to 3 protect any deposit insurance authority). Bail-in within resolution Moreover, there is debate about whether Among the powers prescribed in the Key strictly adhering to the hierarchy of claims in Attributes, one of the most debated is bail-in liquidation is appropriate. Some authorities advo- within resolution. In principle, bail-in is a means cate exceptions on the grounds that imposing to force unsecured creditors to absorb losses and losses on certain creditors in a class could poten- recapitalize a firm being resolved, thereby reduc- tially undermine financial stability (depending ing the potential need for taxpayer support. In in part on the hierarchy of claims in the jurisdic- effect, the Key Attributes require that resolution tion). Others argue for strictly adhering to the authorities have the power not only to write down hierarchy of claims in liquidation in determining shareholders’ equity but also to write down the which creditors are bailed in. These and other claims of unsecured and uninsured creditors and policy debates are ongoing. to convert some or all of them into equity. Under the Key Attributes, this write-down and possible Temporary public ownership conversion into equity would respect the hierar- One resolution option that has often been chy of claims in liquidation and would probably used for systemically important firms is nation- be used in conjunction with other resolution alization—or temporary public ownership, as powers allowing the restructuring of the recapi- it is referred to in the Key Attributes. The Key talized firm to ensure its long-run viability (Key Attributes envision turning to temporary pub- Attributes 3.5–3.6).4 Bail-in would also include lic ownership, and the taxpayer support that it the power to convert or write down any contin- implies, as a last resort for the purpose of main- gent convertible or contractual bail-in debt whose taining financial stability (Key Attribute 6.5).7 terms had not been triggered before the firm’s entry into resolution.5 Funding for a firm in resolution The basic approach in bail-in is similar to While bail-in is intended to avoid the need to the outcomes achieved in other resolution resort to taxpayer support to recapitalize a fail- techniques. In a typical bridge bank transaction, ing firm, official support may nonetheless be for example, some liabilities (such as deposits) required to provide liquidity during resolution. as well as good assets are transferred to a new, Fair allocation of losses under bail-in arrange- viable bridge entity. The remaining creditors are ments requires a valuation of the firm in reso- left with a claim on the original (failing) legal lution, a process that takes time. During this entity, which is put into liquidation. The effect valuation period the firm’s financial situation is to “bail in” the creditors whose claims were might be so uncertain that market participants not transferred to the bridge entity. The Key may be unwilling to provide operating funding. Attributes seek to provide resolution authorities Recognizing this, the Key Attributes envision with the power to do essentially the same within temporary public support for funding a firm in the original legal entity and thereby restore its resolution.8 They call for making arrangements solvency. to recover any losses that might be incurred Supervisory and resolution authorities in FSB in providing temporary liquidity support from member countries have a diversity of views on shareholders, from unsecured creditors, and, bail-in. Some would like to see the issuance of if needed, from the financial system generally. RESOLUTION REGIMES DEALING WITH FAILING FINANCIAL INSTITUTIONS Temporary stays Resolution trigger Another set of powers advocated by the Key Supervisory and resolution authorities have com- Attributes but not traditionally enjoyed by resolu- monly acted too slowly to resolve failed firms, as tion authorities is aimed at reducing the potential evidenced by the often deep insolvency discov- for counterparty actions (such as by a firm’s credi- ered upon failure. The Key Attributes require that tors or by a payment and settlement system of authorities act to resolve firms before they are which the firm is a member) to undermine effec- balance sheet insolvent and equity is fully written tive resolution action. The Key Attributes call for off. Toward this end, the Key Attributes stipulate legal frameworks and contractual arrangements that authorities should define clear standards and 4 providing that a firm’s entry into resolution or indicators of nonviability (Key Attribute 3.1).12 the exercise of resolution powers does not trigger statutory or contractual setoff rights or entitle Recovery and resolution plans a counterparty to exercise contractual accelera- The Key Attributes require that supervisory and tion or early termination rights, as long as the resolution authorities engage in regular planning firm continues to meet contractual obligations to reduce the risk of failure of systemically impor- (such as making payments or delivering secu- tant firms and ensure that they can implement rities). Where contractual acceleration or early resolution if required. The requirements for termination rights may nevertheless be exercis- recovery and resolution planning apply at least able, the Key Attributes stipulate that resolution to domestically incorporated firms that could be authorities should have the power to temporarily systemically significant if they fail (Key Attribute stay their exercise—within limits, including with 11 and annex 3). Recovery and resolution plans respect to time (Key Attribute 4).9 are intended to serve as guidance for firms and the authorities, with implementation based on Creditor safeguards the circumstances at the time. The ability of resolution authorities to exercise Recovery plans should specify options for the far-reaching powers prescribed in the Key restoring a firm’s financial strength (capital and Attributes is subject to safeguards. A key principle liquidity) under stress scenarios that fall short of is that no creditor should be worse off in a resolu- meeting the conditions or triggers for entry into tion outcome than it would have been had the resolution. Preparing these plans is the responsi- firm been liquidated (Key Attribute 5). Resolution bility of the firm’s senior management and board authorities generally find that liquidation and the of directors, under guidance by the supervisory payout of insured or otherwise protected deposi- authorities. Recovery plans should include mea- tors is a high-cost resolution technique, particu- sures to conserve capital (such as by reducing larly where there is franchise value in the firm. or eliminating dividends) and reduce the firm’s Consequently, liquidation is generally a worst-case risk profile and should also address such matters outcome for an unsecured creditor. Under the as asset divestitures and debt restructuring. The Key Attributes, creditors should have the right to plans should be routinely updated. compensation where they do not receive at least Resolution plans define the detailed actions what they would have received in liquidation. needed to implement a resolution, including maintaining and restructuring operations that Judicial review will be continued and winding down in an The “no creditor worse off” safeguard and the orderly manner those that will not be. Having right to compensation are intended in part to detailed resolution plans in place is essential to facilitate the recommendation that legislation minimizing the financial and economic disrup- establishing resolution regimes should not tions and the potential call on taxpayer funds allow for judicial actions that could constrain or that can be associated with a firm’s resolution. reverse measures taken by resolution authori- Resolution plans ultimately are the responsibility ties acting within their legal powers and in good of resolution and supervisory authorities, but faith. Instead, the Key Attributes call for redress firms are required to provide inputs, including through compensation (Key Attributes 5.4–5.5).11 data and information, and will need the capabil- ity to deliver required information in a timely schemes, and often finance ministries. The Key manner. Attributes require that they cooperate closely with nonmember host authorities in other juris- Cross-border cooperation dictions where the firm is systemically impor- The Key Attributes seek to promote cross-border tant.14 The main role of crisis management cooperation in the resolution of regional or inter- groups is to oversee the development and ongo- national institutions, in particular by requiring ing strengthening of the recovery and resolution the involvement of key host jurisdictions in the plans, cross-border cooperation agreements, and planning activities being led by home authori- resolvability assessments required for each G-SIFI 5 ties, by discouraging the use of ring-fencing by (Key Attribute 8). host authorities,13 and ultimately by harmonizing Cross-border cooperation agreements, entered into national resolution regimes. by home and host authorities participating in cri- Under the Key Attributes, the mandates of sis management groups, set out each authority’s resolution authorities should include a responsi- roles and commitments in recovery and resolu- bility to minimize the costs of resolution not only tion planning, in resolvability assessments, and in their own jurisdiction but also in others—and in resolution. They define cooperation and infor- to take into consideration the impact of their mation sharing arrangements within crisis man- actions on financial stability in other jurisdic- agement groups and with other host authorities. tions (Key Attribute 2.3). For example, the Key They thus define the framework in which home Attributes seek to empower and encourage reso- authorities inform and consult with host authori- lution authorities to act to achieve a cooperative ties (and vice versa) when there are problems resolution with foreign authorities; to ensure with the G-SIFI, before individual authorities take that their legal regimes do not contain provi- significant enforcement actions or resolution sions that trigger automatic action as a result of measures. The agreements require that senior an intervention, resolution, or insolvency action officials from the home and relevant host authori- in a foreign jurisdiction; to avoid discriminating ties meet annually to review the G-SIFI resolution against creditors on the basis of their nationality strategy (Key Attribute 9 and annex 1). or the jurisdiction in which their claim is pay- Resolvability assessments are formal evaluations able; and to share information with authorities of the feasibility of implementing the resolution in foreign jurisdictions. strategy for a G-SIFI. They are conducted by the home authorities in coordination with other cri- Resolution of G-SIFIs sis management group members—and by host As noted, some requirements are mandatory only authorities for key subsidiaries in coordination for FSB-designated G-SIFIs. These include the with the home authorities. Resolvability assess- requirement that home and key host authori- ments should identify impediments that may ties maintain crisis management groups, enter arise, for example, from weaknesses in the legal into institution-specific cross-border cooperation regime or from the G-SIFI’s structure, organiza- agreements, and undertake periodic resolvability tion, or business practices. The Key Attributes assessments. The last two of these require agree- require that the authorities have the power to ment on an overall resolution strategy for each direct the G-SIFI to make structural changes to G-SIFI. improve its capacity to be resolved (Key Attribute Crisis management groups are permanent bod- 10.5). ies specific to each G-SIFI and generally include Resolution strategies are prerequisites for pre- the home authorities and those host authorities paring detailed resolution plans. They must be responsible for the group entities most material agreed on by the crisis management group and to the G-SIFI’s resolution. While similar to super- must be in place in order to undertake resolv- visory colleges, they include not only supervisory ability assessments. Resolution strategies define authorities but also resolution authorities, cen- the overall approach envisioned for the reso- tral banks, other bodies responsible for admin- lution of each G-SIFI. As noted, they are to be istering deposit protection or other guarantee reviewed annually. In practice, they will continue RESOLUTION REGIMES DEALING WITH FAILING FINANCIAL INSTITUTIONS to be updated and improved with changes in in four buckets, each associated with different such factors as resolution powers, the nature and higher capital requirements (to be phased in structure of the firm, and the preferences of the during 2016–19). International banks will be authorities. assessed annually to see whether they meet the Two general approaches to resolution strate- criteria and thus require higher capital. The gies are emerging. One is a top-down approach, criteria will be reviewed and updated every known as single point of entry, that relies on three years.15 the resolution of the parent entity of the group The Basel Committee and the FSB are now (for example, the holding company or parent extending the framework to banks that are 6 bank). In this approach losses in any downstream domestically systemically important. The focus entities are crystallized at the parent, which is is on the potential impact of the failure of an then recapitalized through bail-in of the parent’s international, regional, or domestic firm on indi- creditors. The group remains largely intact. The vidual national economies. The D-SIB framework other basic approach, multiple point of entry, uses a principles-based approach rather than the involves parallel resolution of one or more key prescriptive indicators-based approach used operating subsidiaries. Losses are crystallized at for G-SIBs, reflecting the wider variance in the the level of one or more subsidiaries, which are nature and characteristics of D-SIBs and allowing then resolved separately. In this approach the greater national discretion in designating D-SIBs group is likely to be broken up to some extent (for and in deciding on policy tools that should be example, into different regional or functional applied to them. groups). A combination of the two approaches might also be used. Relevance to developing countries By November 2012 crisis management groups All these recent developments are relevant to had been established for nearly all the FSB- developing countries. FSB-designated G-SIFIs designated G-SIFIs. The work of FSB members operate in many developing countries, and on G-SIFI resolution is being coordinated by the supervisory and resolution authorities in these FSB’s Cross-Border Crisis Management Group, host countries need to be aware of the recovery which meets several times a year and in which and resolution plans for these firms, especially the World Bank participates. when a local subsidiary or branch is systemically important in the host jurisdiction. In principle, Standards for systemically important banks resolution action should be coordinated with all The methodology used by the FSB to formally host authorities, not only those participating in designate international financial firms as glob- crisis management groups. The FSB recognizes ally systemically important is that adopted by the the need for G-SIFI home supervisors and crisis Basel Committee in late 2011 for designating management groups to communicate with host banks as such—for the purpose of requiring authorities that are not members of these groups. additional loss absorbency (capital) and thereby It will develop a formal process for ensuring good reducing the probability of their failure. The communications in 2013. methodology focuses on the potential impact on These developments also have more univer- the global economy should the firm fail (rather sal relevance, through the guidance they offer than, for example, on the riskiness of the firm). It for regulatory requirements and supervisory uses an indicators-based measurement approach practices for the locally licensed systemically to capture different factors that make a firm important firms that are a feature in nearly critical for global financial stability. There are all developing countries. Under the FSB Key five categories—size, cross-jurisdictional activ- Attributes, recovery and resolution plans are ity, interconnectedness, substitutability, and mandatory for systemically important firms in complexity—with all but the size category all countries. And under the Basel Committee including two or more quantitative indicators. guidelines, systemically important firms in all All the indicators are combined to produce a countries should be subject to higher capital score for each firm. Possible scores are grouped charges and greater supervisory scrutiny. These measures will prove useful in develop- ing countries. Supervisors find that the required recovery planning by firms, and the review and Notes approval of such plans by authorities, are pro- 1. The FSB and Basel Committee work described in viding valuable insights into the structure and this Note is part of a broader range of reforms aimed at operations of systemically important firms and SIFIs, including requirements for greater supervisory thus helping to improve supervisory processes intensity and higher capital requirements. The details and identify needed policy reforms. Similarly, of those complementary reforms are not addressed in resolution planning by supervisory and resolu- this Note. 7 tion authorities will help to identify legal and 2. The Basel Committee standards discussed later in this policy impediments to dealing with distress in Note prescribe prudential requirements and superviso- such firms, which can inform essential reforms to ry activities that complement the objective of reducing resolution frameworks. Assessments of whether the risk of failure of systemically important firms. systemically important firms can be resolved 3. For example, in July 2012 the Committee on can inform decisions on prudential regulatory Payment and Settlement Systems at the Bank for In- requirements (capital charges, liquidity stan- ternational Settlements (CPSS) and the International dards, operational or structural limitations) as Organization of Securities Commissions (IOSCO) well as supervisory practices. In this sense a focus published a consultative report on how to interpret on resolutions should drive improvements to core and apply the Key Attributes for financial market infra- regulatory and supervisory frameworks. structure firms. As noted, an assessment of adherence to 4. The hierarchy of claims refers to the order in which the FSB Key Attributes will become part of the different classes of unsecured creditors are paid in liqui- Financial Sector Assessment Program as early dation. For example, employees’ salaries and pensions as 2014.16 Developing country authorities may may have highest priority, followed by tax liabilities, wish to begin undertaking self-assessments in depositors, senior debt holders, general unsecured advance—particularly of the resolution regimes creditors, and, finally, subordinated debt holders. for systemically important institutions, which 5. Some jurisdictions require certain banks (for ex- in most countries probably include banks and ample, those that are systemically important) to issue financial market infrastructure firms. debt that is convertible into equity under specific con- The basic elements of the G-SIFI agenda also ditions. In some cases the conversion can be triggered have relevance to developing countries where under the terms of the contract (for example, if the regional banks and other institutions are sys- regulatory capital ratio should fall to a certain level), temically important to more than one national in what is known as contractual bail-in; in other cases jurisdiction (such as in Central America or East it can be triggered by the resolution authorities (for Africa). For such firms, supervisory and resolution example, if the firm should be put into resolution), authorities could consider establishing bodies in what is known as statutory bail-in. In effect, the Key similar to crisis management groups, with at least Attributes require that all such debt be converted into supervisory and resolution authorities from the equity once a firm is placed into resolution. jurisdictions critical to the possible resolution of 6. This would not only ensure the existence of a con- the firm. Similarly, these authorities will find value tingent capital buffer in all G-SIFIs but would also jump- in articulating a basic resolution strategy for each start the nascent market for such debt. firm, undertaking resolvability assessments in the 7. The Key Attributes do not prescribe temporary pub- context of that strategy, developing more detailed lic ownership as a necessary resolution power. plans for implementing the strategy, and entering 8. Such liquidity support could be provided by, for into formal cooperation agreements that help example, the central bank, a deposit insurance fund, a to institutionalize different authorities’ roles and resolution fund, the treasury, or a combination of these responsibilities in the event of distress in the firm. sources. The greater collaboration that would result could 9. The Key Attributes suggest limiting a temporary stay help reduce the risk posed to national economies to two days, indicating the speed with which resolution by cross-border financial firms. authorities are expected to be prepared to act. Annex 4 RESOLUTION REGIMES DEALING WITH FAILING FINANCIAL INSTITUTIONS of the Key Attributes sets out additional conditions for 15. The International Association of Insurance Supervi- issuing a temporary stay. sors (IAIS) is preparing a similar framework for globally 10. Rather than liquidation, it is usually less expensive systemically important insurers. to pay another bank to assume the insured or protected 16. An assessment methodology is being developed and deposits or even all the deposits of the failing bank, will be tested in early 2013. viewpoint probably along with the good assets (marketable securi- ties, performing loans, branches). Liquidating a bank, References especially a systemically important bank, can destroy Basel Committee on Banking Supervision. 2011. Global is an open forum to substantial franchise value. Systemically Important Banks: Assessment Methodology encourage dissemination of 11. The Key Attributes acknowledge that in some and the Additional Loss Absorbency Requirement. Basel. public policy innovations jurisdictions the courts will continue to have a role in Committee on Payment and Settlement Systems and for private sector–led and triggering or reviewing resolution actions. Board of the International Organization of Securi- market-based solutions for 12. The recently adopted International Association of De- ties Commissions. 2012. Recovery and Resolution of development. The views posit Insurers (IADI) Core Principles also seek to reduce Financial Market Infrastructures. Consultative Report. published are those of the the risk of the authorities being too slow to trigger resolu- Basel. authors and should not be tion. Principle 15 requires that the recognition that a FSB (Financial Stability Board). 2011. Key Attributes of attributed to the World bank is, or is expected to be, in serious financial difficulty Effective Resolution Regimes for Financial Institutions. Bank or any other affiliated be made early and on the basis of well-defined criteria. Basel. organizations. Nor do any 13. Ring-fencing involves the imposition of restric- International Association of Deposit Insurers and Basel of the conclusions represent tions that have the effect of trapping excess capital or Committee on Banking Supervision. 2009. Core Prin- official policy of the World liquidity in a subsidiary or branch in a host jurisdiction, ciples for Effective Deposit Insurance Systems. Basel. Bank or of its Executive which can impede resolution of the parent entity or the Directors or the countries broader group. they represent. 14. This will include many developing country jurisdic- tions. To order additional copies contact Naoki Ogiwara, managing editor, Room F 4P-256B, The World Bank, 1818 H Street, NW, Washington, DC 20433. Telephone: 001 202 473 1871 Email: nogiwara@worldbank.org Produced by Carol Siegel Printed on recycled paper This Note is available online: http://www.worldbank.org/fpd/publicpolicyjournal