Economics Financial Regulation Questions
The purpose of resolution planning in financial regulation is to ensure that financial institutions have a plan in place to manage their potential failure in an orderly manner, without causing significant disruptions to the financial system. It aims to protect taxpayers and minimize the risk of a financial crisis by requiring institutions to develop strategies and procedures for resolving their financial distress, including options for restructuring, recapitalization, or orderly liquidation. Resolution planning also helps to enhance the resiliency and stability of the financial system by promoting transparency, accountability, and risk management within financial institutions.