The global financial crisis sparked many new political initiatives aimed at preventing and containing future crises. In Europe, where it became a banking and sovereign debt crisis, it led among other things to the creation of the banking union in the eurozone. European leaders agreed that the European Central Bank (ECB) should supervise the eurozone’s most important lenders, to create a single rulebook and centralise funds to deal with future banking crises.

But more work is needed for the banking union’s completion.

Bailing out banks

On 16 April MEPs adopted two reports on bank bailouts by Swedish EPP member Gunnar Hökmark, which say that in the event of a crisis EU countries need to ensure that financial institutions can absorb sufficient losses, so that they will have a minimum impact on financial stability and on taxpayers. Timely clarity is needed, the reports say, to ensure certainty for the markets and allow for a build-up of necessary buffers.

“The new requirements will reduce risks in the financial system, but at the same time, we managed to ensure that banks can play an active role in financing investments and growth,” said Hökmark.

The reports also highlight the importance of having competent authorities with early intervention powers, so that they can help an institution in a deteriorating financial situation.