THE taxpayer will never again have to fund bailing out struggling banks as they are currently having to do in Spain, thanks to a new EU ruling.
A meeting in European Parliament yesterday (Tuesday) led to the green light being given for a banking self-funding pot.
This 'insurance policy' aims to set up a common fund of at least 55 billion euros to cover the closure of ruined high-street banks, guaranteeing money held on deposit up to 100,000 euros.
The banks themselves will be obliged to make a set contribution, and have eight years to do so.
Where EU member States decide to opt out of the common fund, their banks will be required to set up their own buffer zone of one per cent of total deposits, within a maximum of 10 years.
Banks in all of the European Union's 28 member countries are obliged to have enough capital in reserve to guarantee that in the event of a sudden closure, it would be able to cover the deposit accounts of all customers, up to a maximum per person of 100,000 euros.
And all savers have the right to request their bank hands over their entire savings, up to a maximum of 100,000 euros, within seven days.
Taxes levied on banks will cover any future need to bail out financial institutions which are about to go under, rather than the EU supplying a loan which the nation needs to pay back through raising taxes and reducing public funding, as was the case when Spain applied for a bail-out credit in the sum of 100 million euros.
Shareholders and creditors will be the first to bear the brunt of any financial problems affecting banks in the future.
The three-pillar banking structure reform, part of which was created in 2013, was rushed through following the bail-out of Cyprus.
Read more at thinkSPAIN.com