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We then show that, for global financial institutions that operate in multiple jurisdictions, SPOE is the efficient resolution mechanism in a benchmark setting in which regulators maximize joint surplus and can commit to cooperating in the middle of a crisis, thereby emulating the actions of a benevolent supranational regulator. Because SPOE resolution allows regulators to transfer resources between operating subsidiaries in different jurisdictions, a successful SPOE resolution regime can be achieved with a lower amount of required loss-absorbing capital than would be possible under separate national MPOE resolution schemes. As a result, for the same level of risk acceptable to regulators, SPOE resolution allows global financial institutions to provide more socially beneficial banking services than would be possible under MPOE resolution. Moreover, because the bank is resolved as a whole, efficiency gains from global banking are preserved.

However, under the regulatory status quo—in which global financial institutions are resolved by national regulators—it may be difficult to realize the benefits of a global SPOE resolution. First, whenever expected cross-jurisdictional transfers are sufficiently asymmetric, the national regulator that makes the larger expected transfer has an incentive to opt out of a globally efficient cross-jurisdiction SPOE resolution and to set up a national resolution scheme instead. From an ex ante perspective, the creation of an efficient SPOE resolution regime is therefore feasible only if the expected cross-jurisdictional transfers are sufficiently symmetric.