The European Commission has issued a communication titled An EU Framework for Crisis Management in the Financial Sector (communication). The communication sets out the policy orientations the Commission intends to pursue on the basis of the work done to date on crisis management and resolution. The Commission will continue its preparatory work along these lines with a view to presenting legislative proposals in Spring 2011. That proposal will be accompanied by an impact assessment, and will complete the Commission's implementation of the principal G20 reforms in the area of financial regulation. A public consultation on technical details of the legislative framework under consideration will be launched in December 2010.

The Commission is now working on a framework for crisis management and the impact assessment that will inform its development and accompany the formal proposal in Spring 2011. The overriding objective of a European resolution framework should be that ailing institutions of any type and size, and in particular systemically important institutions, can be allowed to fail without risk to financial stability whilst avoiding costs to taxpayers. To achieve this in the banking sector, the Commission is developing a framework for prevention, crisis management and resolution based on the following objectives: Before adopting its proposal, the Commission will consult on the technical details of its possible provisions in December 2010. This framework will cover policy areas outlined in this Communication: the harmonisation of tools, the coordination of national measures and financing arrangements. For this purposes of this framework, national insolvency laws will only be modified to the extent that is necessary to support the measures outlined above. This might include modifications needed to confer the necessary protections for creditors and shareholders of the transferee where assets are transferred between group entities, and depositor preference if that is desirable in the light of a statutory debt write down power.