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Bank Insolvency: China and Europe compared

A joint global research project, “New Bank Insolvency Law for China and Europe”, which started in 2014, is nearing its completion. China University of Political Science and Law (CUPL, Beijing, China) and Leiden Law School’s Hazelhoff Centre for Financial Law are finalizing an innovative joint research on “New bank Insolvency Law for China and Europe.”

The project is partly funded with a grant from the Royal Netherlands Academy of Science (KNAW) and the Ministry of Education from the People’s Republic of China . Last week, in Beijing, a third and last workshop was held.

The core of the project are the Chinese and European legislative efforts of the last eight years to establish measures to prevent and overcome bank insolvencies, which is undoubtedly a topic of economic, social and political relevance. A team of some ten researches from both universities have been taken part in the project, led by professor Haentjens (Leiden), professor Qingjiang Kong (CULP) and professor Bob Wessels (emeritus professor of international insolvency law).

In March 2015, during a workshop in Beijing, the first two reports were discussed. These reports set out the current and future state of, in short, bank insolvency law in China and Europe. Both reports follow a similar structure and discuss some ten topics, including regulatory initiatives, resolution measures, judicial review, and deposit guarantee schemes, but also an account of relevant national contract law, corporate law and insolvency law. As a result of that conference, five topics were selected for further research in a second set of reports. These reports have been the focal point at a workshop that took place in Leiden in November 2015. It covers financial transactions entered into by failing banks, judicial redress, deposit guarantee schemes, bail-in and the recognition of resolution measures of and in third countries. Revised and integrated versions of these reports will be published as separate books by Eleven International Publishing in April 2017. The project will conclude with a comparative report evaluating the most salient topics.

The reports reflect long-standing academic cooperation between CUPL and Leiden Law School which has proven to be an excellent foundation for the joint research project that addressed the main question: “how to best achieve a modernized bank insolvency regime for China and the EU?”

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