Keywords
bank resolution
cross-border insolvency
financial regulation
Colombia
Central America
How to Cite
Abstract
The objective of this research paper is to analyze the main concepts and mechanisms of bank resolution, international proposals and the specific regulations in force in the country, as well as to propose a roadmap for the harmonization of a single bank resolution framework for Colombia and Central America. The main conclusion is that, despite the interconnectedness of the financial systems of Central America and Colombia, there is no binding regime to resolve potential conflicts of interest between resolution authorities in cross-border crisis scenarios and thus ensure effective coordination between them. Therefore, we propose adjustments and regulatory challenges for this resolution framework, based on the recognition of the Bail-in resolution mechanism in Colombia as the principal tool for cross-border resolution, as well as the adoption of a law in the participating countries aimed at achieving the recognition of orders from the main resolution authorities. Nonetheless, we identified its regulatory inconveniences.
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