Recital 27

(27)In the context of assessing the potential benefits in terms of value preservation of an exclusion from bail-in, Article 36(16) and Article 49(5) of Directive 2014/59/EU respectively empower the Commission to adopt regulatory technical standards relating to valuation for the purpose of resolution, and to the valuation of derivatives. Depending on the applicable methodology, additional losses may crystallise from the close-out of derivatives and exceed the bail-in potential of the corresponding liability, causing further losses which may increase the burden of bail-in for other creditors of the institution under resolution. Additional losses may result from replacement costs incurred by the counterparty, or costs incurred by the institution under resolution to re-establish hedges left open that are not reflected in the going concern value of derivatives. In such circumstances, the resolution authority should assess whether that reduction in value would mean that the losses borne by non-excluded creditors would be higher than if the liability in question was excluded from bail-in. Purely speculative expectations of a potential increase in value may not serve as a ground for exclusion,