The crisis showed that the pivotal role of the banking system, essential for the smooth running of our economy, comes at a cost. Although bankers were the ones taking hazardous risks, it was ordinary people footing the bill, when governments used tax money to prop up failing banks. It raised the question of whether banks were there to serve people or the other way around.
New European legislation - known as the bank resolution system - was meant to resolve this once and for all in eurozone countries, before member states tried to water down the original proposal. However, following tough negotiations with the European Parliament a deal has been reached to ensure that the system cannot become hostage to political power games and can deliver swift and credible decisions.
Portuguese MEP Elisa Ferreira, who led the negotiations on behalf of the Parliament, said: "This deal has repaired many of the serious flaws in the initial Council position and I believe it is an improvement not only for the majority of MEPs, but for many EU countries too. The mechanism as agreed will, I believe, be able to deliver the key goals for which it was intended."
The improvements include reducing the time needed to establish a resolution scheme. If needed, it could be done within a weekend, from US markets closing to Asian ones opening, so that a bank run can be avoided. Also to avoid political interference, the Council will only get involved at the request of the European Commission, while the European Central Bank will act as the main authority to decide whether a bank is on the brink of failing.
These elements were essential to maintaining the original goal, namely that tax payers should no longer bear the cost of bailing out banks.
MEPs will vote on the deal during the plenary session in Strasbourg in April.
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