EU Summit: “Landmark” agreement on banking reform

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Euro

Photograph by Alf Melin

EU ministers have agreed to create a €54 billion (£46bn) fund, financed by the banking industry, to respond to future crises of failing eurozone banks.

The deal is part of a wider plan of a banking union to avoid unpopular future taxpayer-funded bailouts of the financial industry, and represents a consolidation and centralisation of power in Europe.

Under the agreement, national banking bailout funds will gradually merge into a single Europe-wide pot over the next decade, with a new European resolution authority established to determine how failing banks may be closed in the future.

The UK, along with 10 other non-eurozone countries, are not part of the agreement, and a number of commentators have warned that a £46bn fund will offer little protection from a 2008-size financial collapse. It is smaller than the bailout issued to the Royal Bank of Scotland by the UK taxpayer.

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