European Commission adopts proposal to strengthen banks against crises

The European Commission adopted a proposal Tuesday to strengthen the bloc’s existing bank crisis management and deposit insurance framework.

Focusing on medium-sized and smaller banks, the proposal will enable authorities to organize the banking sector broadly.

“In particular, it will facilitate the use of industry-funded safety nets to shield depositors in banking crises, such as by transferring them from an ailing bank to a healthy one,” it said.

“Such use of safety nets must only be a complement to the banks’ internal loss absorption capacity, which remains the first line of defence.”

The objectives are “preserving financial stability and protecting taxpayers’ money”, “shielding the real economy from the impact of bank failure” and “better protection for depositors.”