29 April 2015
Currently a draft of law for recovery measures and resolution of crisis
on the financial market is being discussed. This law should transpose
the directive of European Parliament and Council 2014/59/EU of 15th May
2014, the so-called BRRD (Bank Recovery and Resolution Directive). The
proposer of the law is the Ministry of Finance. The law should ensure
prevention and solution of crises of banks, credit unions and investment
firms (in summary “institutions”) and related protection of stability
of financial markets and public finances. The basic principle of the
whole framework is for the costs of crises resolution to be carried
primarily by shareholders and creditors by write-offs of their assets.
Based on this draft, the Czech National Bank shall execute the powers of
crisis resolution authority and determine the appropriate approach to
solution of the given institution’s situation.
The crisis resolution fund shall also be established, created mostly
from contributions of individual institutions, and its resources can be
used for crisis resolution while adhering to strictly set rules.
Procedures for exceptional use of state budget resources will be
incorporated.
The draft of law also imposes obligations on the affected institutions,
such as e.g. preparation of recovery plans, maintaining required minimum
amount of eligible liabilities that can be written-down, or paying the
above mentioned contributions to the Fund for crisis resolution.
Update February 2016
The Law No. 374/2015 Coll. for recovery measures and resolution of crisis on the financial market has been in effect since 1 January 2016. This law will be supplemented by a set of European Banking Authority (EBA) guidelines and by binding and directly applicable European Commission regulations. The Czech National Bank confirmed that it will obey the EBA guidelines issued.
The newly formed Crisis Resolution Fund will be integrated into the Financial Market Guarantee System as an organisational and accounting unit and will collect financial resources that can be used if a crisis situation occurs. The Financial Market Guarantee System was established in the Czech Republic by the transformation of former Deposit Insurance Fund.
Update January 2017
In October 2016 the Czech government submitted an amendment of Law No. 374/2015 Coll. for recovery measures and resolution of crisis on the financial market, and an amendment of other related laws. The objective of the amendment is to specify more accurately and complement some of the previously implemented provisions of the BRRD. Concurrently, based on the experience some issues on the functioning of Financial Market Guarantee System are amended.
https://apps.odok.cz/veklep-detail?pid=KORNAENHZU5Q
Update May 2017
Article Financial market laws and law amendments in the Czech Parliament