Ministers from across Europe have put the finishing touches to blueprints that will give the European Central Bank (ECB) the power to close troubled lenders when it starts to police them next year.
After negotiations between representatives from various member states, ministers are now set to formally debate and approve the plans, which would see the formation of a banking union that would seek to avoid future bailouts of banks by the taxpayer.
Although the UK is not part of the deal, critics believe that the new measures constitute the most significant step since the creation of the euro in the centralisation of power to Europe.
The European Resolution Authority (ERA), which will gradually be set up over the next decade, will be funded by the banks themselves and will act as a watchdog. It will also be given the power to close banks in order to minimise collateral damage to the single currency economy.
The banking union will comprise of three pillars, the first of which will see the ECB setting up the new resolution authority. The second is the Single Resolution Mechanism, which will mean that Europe will move toward a common process of bailing out troubled banks, funded by the ERA, and the third pillar will see the creation of a common deposit guarantee, meaning that the resident savers in the countries that are struggling will have up to €100,000 (£84,000) of their savings protected.
These measures will avoid taxpayer bailouts, as was the case with Lloyd’s and the Royal Bank of Scotland (RBS). They will also ensure consistency across the eurozone and avoid banks dipping into savers’ accounts, which was suggested when the Cyprus national bank got into major trouble.
Reuters reported that German finance minister Wolfgang Schaeuble said that the deal meant that Europe will have “created the banking union’s final legal pillar”.
RBS to create ‘internal bad bank’ in an effort to shed risky assets
Government could start RBS privatisation in mid-2014
Campaigners angry at size of RBS bonus pot after bank records £5.17bn loss for 2012
Like our Facebook Page
How Cities In Canada Are Addressing Climate Change
10 Tax Incentives for Businesses That are Lowering their Carbon Footprint
How to Manage Anxieties About Climate Change
Green Brands Must Understand Their Customers to Market Wisely
Key Necessities for Starting an Eco-Friendly Freelance Business
6 Ways To Overcome Cash Flow Challenges as a Green Business
Going Cashless Lowers Our Carbon Footprint and Has Other Pros and Cons
How to Be as Eco-Friendly as Possible on a Trip to New York
Why Brazed Plate Heat Exchangers Are Eco-Friendly
6 Steps For Making Crypto & Blockchain Eco-Friendly
How To Use Solar Power Sustainably At Home
Building a Career in Green Construction: Tips and Insights
Solar-Powered Security Systems: Protecting Your Home and the Environment
Top 5 Benefits of Workplace Sustainability
The Role of Smart Technology in Managing EV Charging Stations
4 USA Vacation Destinations for an Eco-Friendly Trip
Why Internet Faxing Is A Sustainable Business Move
5 Ways Eco-Friendly Employers Can Boost Efficiency
6 Wastewater Management Tips to Reduce Water Pollution
What to Look for When Choosing an Eco-Friendly Locksmith
- Environment3 months ago
6 Home Improvements You Can Make to Help the Environment
- Environment10 months ago
4 Countries That Have Banned Single-Use Plastic
- Features9 months ago
5 Huge Support Tips for Eco-friendly eCommerce Brands
- Environment7 months ago
How to Ensure Your Home’s Eco-Friendly During Construction?