Union national brazil opportunity liquidating fund

The challenge posed by the second goal of any financial safety net (to minimize the cost of a failure resolution without weakening the financial system) lies in the fact that minimizing disruption to the economy and maintaining public confidence in the financial system can be costly.One way of meeting this challenge is to adhere to a least-cost requirement; that is, to evaluate the cost of different failure-resolution techniques and determine which is the least costly to the deposit insurer.Practice in the United States In the United States, winding up the affairs of a bank that has failed typically involves two stages.The first stage-the resolution stage-is the process of resolving a failed bank; the second stage is the process of liquidating the assets of the failed bank (the receivership process).If the least costly bid involves the acquisition by a bank of some or all of the assets and liabilities of the failed bank, the FDIC works with the acquiring bank until the end of the closing process.If the least costly bid does not involve an acquirer, the FDIC ensures timely payment to insured depositors and liquidates the assets over time.

Thus, the deposit insurer plays a role in the resolution of insolvent banks.Resolving failed banks in a manner that undermines market discipline (for example, by covering all deposit and creditor claims) will simply weaken the financial system in the long run by encouraging excessive risk taking.But not resolving failed banks promptly will also undermine the market mechanism-and may, in addition, substantially increase the costs of a resolution.Even in a healthy economy, banks may become troubled.When a bank is no longer a viable business, the financial safety net should provide for that bank's resolution and asset liquidation.

The receivership process is used for all resolutions except open-bank assistance.

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Union national brazil opportunity liquidating fund introduction

Union national brazil opportunity liquidating fund

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