MEPs have given their seal of approval to an EU backstop that aims to reduce the risk of taxpayers having to bail out banks in the future.
Under the new rules, creditors and shareholders will be the first to take a hit.
Elisa Ferreira, a Portugese centre-left MEP, said: “I am extremely happy. It took us a lot of effort, very difficult negotiations with the council but we managed to get first and the most important thing, that is, we are convinced that taxpayers will not be ever called to rescue banks.”
There’s also a new European body that will be able to close or restructure failing banks.
But one German MEP argued the new legislation won’t necessarily protect taxpayers.
Sven Giegold, a German MEP, said: “There are loopholes in the legislation which can under certain circumstances make it possible to put in taxpayers’ money again.
“And that would be a collective effort to close these loopholes as far as possible. The parliament has done it, but mainly France and Italy have assured in the council of member states that these loopholes continue to exist.”
Euronews’ correspondent Sandor Zsiros said: “Many think the agreement over the Single Resolution Mechanism is the biggest achievement of this session of the European Parliament. But the financial reform package is still not ready, the decision about the guarantee fund for securing the depositors’ money comes only after the EU elections.”