What if the EU's first big bank bail-in wipes out bondholders?
A real BRRD bail-in wiping mid-size bank bondholders reprices the entire European bank-debt stack; widen subordinated and AT1 spreads, short the weakest national champions' capital instruments. The precedents are Italy's 2015 four-bank bail-ins and the 2017 Banco Popular SRB resolution that zeroed equity and AT1s. The 2023 CS AT1 wipe is the cross-border analogue showing how fast the asset class reprices. Roots are sensibly credit/financial-conditions weighted; the crypto-led cascade ordering is the only oddity.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. First major application of resolution rules wipes out a mid-size lender's bondholders, repricing bank debt. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.