European lawmakers on Tuesday approved key laws reforming the euro zone’s banking sector, completing a “banking union” which will protect taxpayers from having to pay for costly bank bailouts in future.
“This new legislation stipulates what has to happen when a bank needs to be resolved, that (it) is wound down in an orderly fashion with a minimum impact on taxpayers and financial stability,” Gunnar Hökmark, a Swedish member of European Parliament (MEP) said in the Strasbourg plenary session.
The rules agreed at the European Parliament’s final session before European elections in May, are the culmination of a long process started after the 2009 financial crisis which saw banks across Europe require bailouts, often at the expense of taxpayers.
A deposit guarantee scheme, in which depositors will be guaranteed coverage of 100,000 euros in case of bankruptcy backed by funds to be collected in advance from the banking sector, was also given the green light.
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