4.4 The concept of resolution

Resolution is defined in Article 2 BRRD as ‘the application of a resolution tool or a tool referred to in Article 37(9) in order to achieve one or more of the resolution objectives referred to in Article 31(2)’. Resolution basically is the situation in which a bank is failing or likely to fail, while there is no alternative private sector measure or supervisory action to prevent such failure, and public interest necessitates the application of one or more of the resolution tools to achieve one or more of the resolution objectives.1 The main elements of resolution are (a) the application of one or more resolution tools, (b) to achieve one or more resolution objectives, (c) in a situation in which the conditions for resolution are met. These elements are discussed in more detail in the following sections. First the conditions for resolution are discussed, because resolution tools can only be applied when these are met.