EU legislation to prevent banks dragging countries into recession

Legislation that would have drastically cut the amount of taxpayers’ money that went to bail out Irish banks and will ensure bondholders pay in future will be unveiled by the European Commission today.

Known as A European Framework for Bank Recovery and Resolution, it is designed to ensure that high profile banks would not bring down a country’s economy in the future.

“The lack of tools in the case of Anglo Irish and Icelandic banks shows how the problems of one bank can drag a whole country into recession. The losses incurred by Anglo Irish Bank could have been covered by bailing in shareholders and creditors along the lines of these proposals rather than employing public funds,” said a commission official.