This consultation is part of the Commission’s ongoing efforts to establish a comprehensive set of measures dealing with possible banking failures.
On 20 October 2010, the European Commission issued a Communication on a European crisis management framework for the financial sector. This Communication was the first step in the EU’s commitment to ensure the development of preventive and curative tools that could be applied in the event of another financial crisis.
Indeed, for reasoons of financial stability, banking failures cannot be resolved by the application of ordinary insolvency rules. Therefore, specific measures need to be enacted, bearing in mind that the main objective is to avoid putting the burden on taxpayers.
Through the consultation, the Commission will decide how to develop the core guidelines laid down in the Communication of 20 October 2010, namely:
• development of common and effective tools and powers to deal with failing banks at an early stage;
• arrangements ensuring coordination and cooperation between authorities in order to avoid cross-border effects of banking failures;
• development of mechanisms which ensure that the burden is shared fairly, avoiding the use of taxpayers’ funds.
The responses to the consultation will be looked at seriously and taken into account when drafting future legislations relating to comprehensive crisis management frameworks for banks and investment firms. The proposals for this legislation should be finalized before summer 2011.
Any citizen is welcome to contribute to the consultation, although the contribution of market participants will be especially welcome. The final deadline for participating in this consultation is 3 March 2011.
Practical information, as well as the surveys, is available online: click here.
