EU to unveil plan to protect taxpayers from failing banks

The European Commission is expected to unveil on Wednesday new proposals designed to stop taxpayers' money being used to bail out failed banks. The proposals aim to ensure losses are borne by bank shareholders and creditors and minimize costs for taxpayers and to prevent runs on banks in one country, such as Spain or Greece, pulling down the entire system, according to the (BBC). A key goal is to make sure that essential everyday banking functions, such as cash machines, are kept going, it added. The global financial crisis has seen a succession of major banks fail, including Northern Rock, Lehman Brothers, leading Icelandic banks, the Belgian-Dutch giant Fortis and Franco-Belgian Dexia and the Republic of Ireland's Anglo Irish Bank. Banks are currently in the spotlight in Greece and Spain, where the latter is trying to find more than 80 billion euros ($100bn) to strengthen their capital buffers. The bank resolution plan forms part of commitments agreed by the leaders of the G20 group of major economies in September 2009. They would give EU authorities the power to intervene early. A new mechanism will allow authorities to reduce the claims of unsecured creditors, meaning that shareholders and creditors bear the losses, not governments and the taxpayers that support them. The changes will not be introduced before 2018.