Forex News – EU Summit concludes with deal on bank rescue system
June 28, 2013 7:33 am
The EU Summit concluded with deals made by European leaders on banks, the EU budget and youth unemployment. A major breakthrough was made on how to deal with bankrupt banks.
The cases of Cyprus and Ireland have shown that a state can go too far when saving its banks and might then need help itself. There has been alot of debate recently that it is unfair for taxpayers to “foot the bill”. In the recent banking crisis in Cyprus, deposit holders were made to “save” banks by imposing a “haircut” on deposits above 100,000 euros.
Based on this system, EU Finance ministers agreed on a system of “cascading liability.” In this system, shareholders will be approached first when a bank starts to slip followed by wealthy bank bond holders and clients.
This would be part of a banking resolution agreement designed to shield European taxpayers from having to pay for bank losses will be implemented on a national basis from 2018.
The plan lays the ground for a single system to resolve failed banks in the euro zone and the 27-nation EU, the second stage of what policymakers call a European banking union, meant to strengthen supervision and stability of the financial sector.
Other issues agreed upon at the EU Summit were social issues, mainly youth joblessness and steps to fight youth unemployment. The 27 leaders of the EU countries resolved to spend 6 billion euros over the next two years to support job creation, training and apprenticeships for young people.
The EU Summit concluded with deals made by European leaders on banks, the EU budget and youth unemployment. A major breakthrough was made on how to deal with bankrupt banks.
The cases of Cyprus and Ireland have shown that a state can go too far when saving its banks and might then need help itself. There has been alot of debate recently that it is unfair for taxpayers to “foot the bill”. In the recent banking crisis in Cyprus, deposit holders were made to “save” banks by imposing a “haircut” on deposits above 100,000 euros.
Based on this system, EU Finance ministers agreed on a system of “cascading liability.” In this system, shareholders will be approached first when a bank starts to slip followed by wealthy bank bond holders and clients.
This would be part of a banking resolution agreement designed to shield European taxpayers from having to pay for bank losses will be implemented on a national basis from 2018.
The plan lays the ground for a single system to resolve failed banks in the euro zone and the 27-nation EU, the second stage of what policymakers call a European banking union, meant to strengthen supervision and stability of the financial sector.
Other issues agreed upon at the EU Summit were social issues, mainly youth joblessness and steps to fight youth unemployment. The 27 leaders of the EU countries resolved to spend 6 billion euros over the next two years to support job creation, training and apprenticeships for young people.
Related Posts: