After global financial crisis, there has been a lesson for a need to handle differently the
globally systemically important banks (hereinafter, G-SIBs). The G20 Summit 2010 in Seoul
suggested to introduce a recovery・resolution plan (hereinafter, RRP) and Financial Stability
Board (hereinafter, FSB) announced the ‘Key Attributes of Effective Resolution Regimes for
Financial Institutions’in 2011 and in 2013 the FSB also provided a guidance for RRP which is
‘Recovery and Resolution Planning for Systemically Important Financial Institutions: Guidance
on Developing Effective Resolution Strategies’.
At the background of these series of global movements, some ideas were taken into
consideration such as limitation for bailing out the globally gigantic financial companies with
taxpayers’ money, the creditors’s loss sharing (the concept of bail-in) in case of insolvency
thereby restraining their moral hazards, etc. Moreover, from the ex-ante plan against the
insolvency, RRP would help to avoid another financial crisis.
At this moment, Korean financial supervisory authority also announced that it would
introduce some devices for the bail-in like duty to make RRP, administrative bail-in, temporary
stay right following the FSB’s recommendation. However, in detail, there is little to be seen
about this plan of introduction so far. Among the bail-in devices which Korea will try to adopt,
the ex-ante plan of recovery and resolution for its domestic systemetically important big banks
(D-SIBs) against their possible insolvency is the most important one for their efficient and quick
recovery or resolution to minimize the potential impact on the financial market.