In reaching agreement on a proposal
to deal with state banks in trouble, the E.U. finance ministers sent two
messages: taxpayers would be protected from any open-ended obligation to bail
out failed banks and those banks would not be allowed to capitalize on being
bailed out. Given the furor that had been unleashed when the E.U. went after
depositors in the two largest Cypriot banks, the E.U. ministers were careful to
point out “that depositors with less than €100,000 ($130,820) in their accounts
would always be safe, while small and midsize companies and bigger savers would
only be hit during the most severe bank failures.” Systemically important banks whose failure could be expected to cause the E.U.
financial system to collapse would be handled on a case by case basis.
The full essay is at "Essays on the E.U. Political Economy," available at Amazon.