Brussels, 26 May 2010

The European Commission has adopted a Communication on Bank Resolution Funds that proposes that the EU establishes a EU network of bank resolution funds to ensure that future bank failures are not at the cost of the taxpayer or destabilise the financial system. Following discussion at the forthcoming European Council, the European Commission will present these ideas at the G-20 Summit in Toronto on 26-27 June 2010.

During the recent financial crisis, a number of govern­ments had to take emer­gency action to stabilise banks. With­out that government inter­vention, several banks might have failed. The fast and effec­tive inter­vention by national govern­ments avoided this and pre­vented serious financial melt­down. The unprecedented circum­stances of the crisis justi­fied that exceptional action.

However, governments acted under national law. There is currently no EU framework for managing crises in the banking sector, and the crisis has clearly shown that the lack of an EU regime hampers the ability of governments to deal with problems in cross-border banks.

Such funds would form part of a broader framework aimed at preventing a future financial crisis and strengthening the financial system. The Commission believes that a way to achieve this is by introducing requirement for Member States to establish funds according to common rules into which banks are required to pay a levy. The funds would not be used for bailing out or rescuing banks, but only to ensure that a bank's failure is managed in an orderly way and does not destabilise the financial system.

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The Commission's communication on bank resolution funds is available at:

http://ec.europa.eu/internal_market/bank/crisis_management/index_en.htm