Where a bank fails, resolution costs must, as a general rule, in the future be borne first by shareholders and creditors. After that, a bank-financed resolution fund is to come into play, and only as a last resort are public funds to be used and the taxpayer made to pay.
The fund is to be built up over a period of ten years and reach a volume of € billion. Before the fund is fully capitalised, bank resolutions would be financed out of national “compartments”, which we welcome in the interests of a balance between liability and control. In the long term, Europeanisation of liability with a centralised supervisor is appropriate.