Under the proposed strategy, the finance ministers from the 27 EU members agreed that investors and wealthy depositors, shareholders, bondholders and depositors, with over €100,000 ($132,000) fund, will have to share the expenses of future banks failures.
The ministers stressed that the option of taxpayer -funded bailouts should only be exercised in extraordinary circumstances, when a government is anxious about effects of a failure bank on its financial stability and this must be approved by the European Commission.
Commenting on the new proposal, Dutch Finance Minister Jeroen Dijsselbloem was quoted by The Independent as saying, "For the first time, we agreed on a significant bail-in to shield taxpayers."
"That’s a major shift from the public means, from the taxpayer if you will, back to the financial sector itself which will now become for a very, very large extent responsible for dealing with its own problems," Dijsselbloem added.
Following approval from EU Parliament, the rule is expected to come into effect by 2018.
