An agreement was reached between the member states of the European Union (EU) and the European Parliament on the reform of the manner in which the problem of stumbled banks is resolved.
The goal is to strengthen financial stability and minimizing the impact on taxpayers.
The new framework provides greater predictability in the treatment in such cases. It is easier to apply to small and medium-sized banks in which they often treated in accordance with national insolvency regulations, instead of using the tools within European regulations.
“This important reform offers more options for dealing with small and medium banks in crisis,” says a unique rehabilitation committee operating within the EU banking Union. Its task is, among other things, to deal with the situation of the collapse of banks.
Now it will be easier to be able to use the unique Eurozone Sanation Fund. In addition, the national deposit guarantee schemes to cover the costs of resolving the insolvency of smaller banks, banker me. b
These sources, as the Financial Times is transferred, will now be able to be used to bridge the gap when the bank does not have enough capital to cover losses. This will avoid the need for state rescue of banks. However, the use of these funds will be under strict supervision and rules.
The competent regulators will continue to insist on the minimum required capital capital as the first line of defense. Support from the Deposit Insurance Scheme will be an emergency solution.
The modified rules provide for testing that should show whether rescue is more cost-effective than liquidation. New criteria will take into account economic disorders in individual parts of the EU that can guess smaller banks.
