Google – AFP, 12 December 2013
A logo of
the European currency Euro stands in front of the headquarters of
the European
Central Bank (ECB) in Frankfurt am Main on June 6, 2013, 2013
(AFP/File, Daniel
Roland)
|
Strasbourg
— EU nations agreed new rules for bank bailouts or "bail-ins" late
Wednesday, to save taxpayers from paying for the rescue of ailing financial
institutions, an official said.
"Big
step tonight," EU Commissioner Michel Barnier wrote on Twitter.
"Taxpayers
no longer in front line to pay 4 banks mistakes," he added.
"Banks
will have to put money aside for rainy days. We are learning lessons of
crisis," he said after the agreement was reached by representatives of the
European Parliament, the European Council -- the EU's executive arm -- and the
28 member states.
The aim is
to make European banks stronger so that they "can lend to the real
economy," he added.
The new
directive will eventually dovetail with the EU's "Banking Union",
which is currently being hammered out.
All
countries now accept the principle that if banks get into difficulty, then it
will not be the taxpayer but investors and creditors that bear the costs. But
differences remain as to how to put that into practice.
EU
ministerial talks in Brussels on Tuesday focused on a so-called Single
Resolution Mechanism (SRM) that would step in to close a bank at risk before it
could do too much damage to the wider economy.
The SRM
would have a pot of cash at its disposal -- funded eventually by the banks
themselves -- to cover the cost involved so the taxpayer does not have to pick
up the bill.
The SRM
would follow an already agreed Single Supervisory Mechanism that the European
Central Bank will run to oversee the top 130 or so eurozone banks directly, and
thousands more indirectly via national authorities.
While all
agree in principle, the political issues are fraught since the new system would
effectively hand control of national banks to the EU.
Those talks
will resume at ministerial level next week with hopes for agreement by the end
of the month.
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