Is Europe’s framework for resolving banks broken?

IF ONE goal has animated the reform of finance since the crisis of 2007-08, it has been a desire to spare taxpayers from having to pick up the bill for bank failures. Regulators have introduced stress tests to see how banks stand up to shocks; America’s latest round of tests concluded this week (see ). They have forced banks to fund themselves with more equity and to issue layers of debt that are earmarked for losses in the event of severe trouble. They have even asked banks to draw up plans for their own dismemberment in the event of failure.