Survey on the Resolution and it's Role in Improving the Stability of Financial Institutions in Iran (With emphasis on Islamic banks)

After the global financial crisis, the pillars of the special system of bankruptcy (Resolution) of financial institutions were given special attention. In addition, many international standards for resolving banks have been developed by the Financial Stability Board (FSB) to gradually provide key Attributes of Effective Resolution Regimes for Financial Institutions. On the other hand, Islamic banking is growing rapidly and its potential impact on global financial stability can not be underestimated. Considering the importance of the issue, This paper examines the applicability of the Key Attributes to the resolution of islamic banks and and identify the mechanism of the resolution tools in the Islamic banking system and their probabilistic analysis in Iran. The results show that the recovery and resolution plans (RRPs) are a key component of international reforms to facilitate orderly resolution and its creation in Iran and banks that operate in accordance with the Shari'a must be accompanied by greater sensitivity and internal and international reform. Also a number of issues would need to be addressed for designing of resolution framework in the Islamic banking system, owing to Islamic banks’ unique governance structures and balance sheets. It recommends international guidance for the design of resolution framework in the banking system of Iran.