Abstract
The focal point of this article lies in the relatively new EU legal regulation of bank recovery and resolution. This legal regulation was adopted after the 2008 world financial crisis.
The main basis of the legislation is Bank recovery and resolution directive (Directive 2014/59/EU) and system of the Banking union. This directive was implemented in Czech law by the adoption of Act 374/2015 Coll.
This article describes the main instruments of this legislation (EU and Czech) such as prevention (plans and standards), early intervention when the bank is ailing or in case of a breach of capital requirements and resolution (appointment of a special manager, bridge bank, asset separation etc.) when the bank becomes unviable. The basic goal of the legislation is to regulate the prevention of the bank crisis and to ensure an orderly resolution of failing banks, while minimising their impact on the real economy and on public finances.
These rules for better protection of taxpayers have also established the bail-in mechanism and resolution funds to deal with bank failures.