The resolution of failing banks: Bail-out or bail-in?

Summary form only given. Prior to the Lehman failure, most large failing banks were rescued by an encouraged merger with a stronger bank. That route has now become more difficult. Because of the dangers of liquidating any large bank, the aim will be to recapitalise them. In the past this has been done by bail-out. This has led to many objections, on grounds of moral hazard, unfairness to taxpayers, and leading to a sovereign/bank `doom-loop´. So there is a drive to shift the burden of recapitalisation onto creditors, i.e. bail-in. But this, too, will have numerous problems, several of which have not (yet) been fully appreciated.