Step in right direction to help banks

Late last year, eurozone finance ministers reached a compromise on the basic elements of the Single Resolution Mechanism — that is, how to deal with banks in difficulty. It looks ugly, but it also appears likely to work.

The main ingredient of the compromise is to use, at least initially, separate national funds in case a bank needs to be saved, while also creating a common Single Resolution Fund of up to €55bn over the next 10 years, which is to be financed by contributions from the banks themselves.

The entire SRM would be run by a collection of national supervisors and representatives from the European Central Bank and the European Commission.