Author (Person) | Tait, Nikki |
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Series Title | Financial Times |
Series Details | 25.5.10 |
Publication Date | 25/05/2010 |
Content Type | News |
Preview and reports of a Communication from the European Commission adopted on the 26 May 2010 discussing Options for Bank Resolution Funds. The Commission's Communication argues in favour of establishing of a harmonised network of ex ante resolution funds, funded by a bank contribution. The resolution funds should be used for the financing of orderly resolution of banks in difficulties and would be one tool of a broader set of measures for crisis prevention and management. A second Communication due in October 2010 would set out the complete set of tools foreseen in this context. The key objective is to allow banks to fail without destabilising the entire financial system and ensuring that tax payers' money are not the first line of defence. The Commission wished to set out its views ahead of the June 2010 ECOFIN Council and G20 Ministerial meetings. It will be important to develop a common approach in order to avoid possible competitive distortions and to enhance cross-border crisis management capacity. 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.' George Osborne, the UK Chancellor (Finance Minister), ruled out creating a dedicated fund in the UK to pay for the winding up of failing banks, putting Britain at odds with the new proposals from the European Commission. France also expressed reservations. |
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Subject Categories | Business and Industry |
Countries / Regions | Europe |
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