Published on 26-05-10
The European Union should establish an EU network of bank resolution funds
to ensure any future bank failures are not at the cost of the taxpayer or
destabilise the financial system, the European Commission announced today.
Such funds would form part of a broader framework aimed at preventing a
future financial crisis and strengthening the financial system. The Commission
believes that a way to achieve this is for member states to establish funds
according to common rules into which banks are required to pay a levy. The
funds would not be used for bailing out or rescuing banks, but only to
ensure that a bank's failure is managed in an orderly way and does not
destabilise the financial system.
Internal Market and Services Commissioner Michel Barnier said: "It is
not acceptable that taxpayers should continue to bear the heavy cost of
rescuing the banking sector. They should not be in the front line. I believe in
the 'polluter pays' principle."
"We need to build a system which ensures that the financial sector will
pay the cost of banking crises in the future. That is why I believe that banks
should be asked to contribute to a fund designed to manage bank failure,
protect financial stability and limit contagion – but which is not a bail-out
fund. Europe must take a lead in developing common approaches and providing a
model for cooperation which could be applied globally," he added.
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