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\\jciprod01\productn\N\NDL\94-2\NDL205.txtunknownSeq: 117-DEC-1814:22BEYOND BANKRUPTCY: RESOLUTION AS AMACROPRUDENTIAL REGULATORY TOOLSteven L. Schwarcz*Postcrisis efforts to extend bankruptcy-resolution techniques to protect the stability of thefinancial system have been insufficient, in part because regulators have been conflating bank-ruptcy’s traditional goals of resolving troubled firms individually with the need to resolve criticalelements of the financial system to ensure its continued operation as a “system.” This requiresresolving troubled firms collectively, as well as resolving securities-trading markets and the infra-structure that serves to facilitate that trading. The Article examines how to design that regula-tion, differentiating three approaches: reactive regulation, which comprises variations ontraditional bankruptcy; proactive regulation, which consists of preplanned enhancements thatare designed to strengthen or facilitate the resolvability of financial system eleme...