European Union leaders are set to sign off on a banking union deal at today’s summit in Brussels after eurozone finance ministers agreed on a major reform late Wednesday night.
The new scheme involves a mechanism enabling the closure of failing banks. Ministers believe it will restore market confidence.
Michel Barnier, EU Commissioner in charge of financial regulation explained:
“We are introducing revolutionary changes to Europe’s financial sector, so that tax payers no longer foot the bill when banks make mistakes or face crises, ending the era of massive bailout,” he said.
The ambitious reform will set up a 55 billion euro fund, financed by the banking industry over the next 10 years.
An agency will be created to manage it, using the money to shut problem banks thus hopefully avoiding government bailouts in the future.