Plan for a coordinated EU approach would establish common rules for intervening when a bank is in financial trouble – and help make taxpayer-funded bailouts unnecessary.
The global financial crisis has demonstrated that a problem with one bank can quickly spread to the rest of the economy and to other countries. It has also become clear that EU countries don't have the right rules in place to properly manage failing banks.
In many cases EU governments have had to spend taxpayers’ money to shore up some of the bigger banks and prevent harm to millions of customers and the financial system.
To fill in the gap, the Commission is proposing a common framework of rules to help EU countries and national regulators respond quickly and effectively to a banking crisis.
The measures would also help reduce the impact a bank failure could have on the stability of the financial markets, and limit the cost to taxpayers if a bailout became necessary.
They would shift the burden of restructuring costs and responsibility to the bank's shareholders, creditors and any employees responsible for mismanagement. The measures would also:
The measures are part of a series of reforms the EU has been introducing to improve the regulation of its financial markets and to protect depositors.