Germany’s cabinet has approved draft laws that effectively give the go-ahead to Europe’s plans for banking union – its main confidence-building response to the financial sector crisis.
With the laws, Germany is pressing ahead of EU requirements in protecting German taxpayers from having to foot the bill when a bank gets into trouble. Instead, in a process dubbed a “bail-in”, creditors and owners will have to take losses from 2015, a year before EU rules take effect.
But a panel of advisers to the government and parliament immediately criticised the plan.
“Even the new rules have some loopholes,” said Daniel Zimmer, the head of the five-member monopoly commission that advises on competition and regulation. “It must be ensured in future that creditors’ liability is implemented forcefully.”
Once in place, the European plans will mean there is one supervisor for eurozone banks, one set of rules to close or restructure troubled banks and one pot of money to pay for everything.
Full article: Germany gives green light to European banking union (The Telegraph)