UK plans to tap deposit insurance to support resolution

New mechanism would use deposit insurance to fund failed banks, bridge banks and regulators

Bank of England
Daniel Hinge

The UK government is planning to allow the Bank of England to tap into the country’s deposit insurance fund to support the resolution of smaller banks.

Under proposals published today (January 11), the BoE would be able to use funds from the Financial Services Compensation Scheme (FSCS) to support its resolution efforts. As resolution authority, the BoE could use the funds to recapitalise a failed firm, meet the operating costs of a bridge bank, or cover costs such as legal fees.

The Treasury

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