Legislation to force banks to create failure fund

New legislation will force banks to create a special fund to cover the future costs of failed banks.

Banks which refuse to contribute to the special fund will face fines of up to a €250,000 - and could lose their banking licence.

The Central Bank will also be given sweeping powers to take over, run and break up banks, under the new legislation.

Business journalist John Ihle said this bill would protect taxpayers from the cost of a bank failure.

"This will allow the Central Bank governor to enact an orderly wind-up of any bank that gets into the sort of trouble that Anglo got into in 2008," he said.