European Parliament president Martin Schulz has called it a historic project, on par with the Single Market.
MEP’s approved the latest elements of the so-called ‘banking union’ on Tuesday, a set of reforms to the financial sector aimed at breaking the link between failing banks and taxpayer money.
“Banks, shareholders and creditors will be the first to face the losses from a bank failure.”
Bail in will the main way to solve the problems, there are also situations in systemic crisis when you need a public intervention. No one shall in the future presume that tax payers will help any bank.” said Conservative Swedish MEP Gunnar Hökmark.
Voting in the last plenary session of the European Parliament before the May elections, the Parliament also approved the establishment of a new authority that will supervise the closing or restructuring of broken euro-zone banks.
It will be backed by a €55 billion common-resolution fund that will be built up over eight years through levies on banks. The bill also includes bank guarantees on deposits under 100.000 euros.
“Bank resolution will be funded by creditors via bail ins and will also by resolution funds which will be funded by banks for banks.”
“Protection of deposits. deposits under 100000 Euros will be guaranteed everywhere and at all times and even above.” said EU Commissioner for Internal Market Michel Barnier.
The law was approved with 570 votes in favor and 88 against and is expected to come into force in 2015.