Taking a big step towards completing the EU banking union, EU finance ministers agreed late Wednesday (December 18) to create a €55 billion bailout fund to wind up Eurozone banks in the next 10 years. After overcoming Germany’s strong legal objections and concerns regarding the establishment of a resolution fund paid by the banks, the chair of the Eurogroup and Dutch finance minister Jeroen Dijsselbloem highlighted that the regime is designed to be fast, effective and “quite simple”.
Under this framework, decisions would be taken by a new Single Resolution Board which would involve the Commission, the Council, the European Central Bank as well as the national resolution authorities. Despite the agreement ensuring that the UK would not have to bear any extra burden if a bank in the Eurozone were to fail, the member state decided to remain outside the mechanism since its banks will continue to be overseen by the Bank of England’s Prudential Regulatory Authority.
Michel Barnier, the EU Commissioner responsible for the reforms, said that “progress made in recent days on the Single Resolution Mechanism and a whole host of financial files is unprecedented”. According to him, “revolutionary changes to Europe’s financial sector, finally learning all the lessons of the crisis, are now being introduced”. Stressing that both European Parliament and the Council are committed to go forward with the EU banking union, Mr. Barnier insisted that flexibility will be needed to reach an agreement, hopefully before Easter.