As part of the EUâs vision for increasing the resilience of the financial services industry, member states would need to set up banking funds into which institutions pay a levy.
The funds would then be used to manage the failure of a bank, but not to help rescue an ailing firm from collapse, the European Commission (EC) explained.
Michel Barnier, internal market and services commissioner, said: âIt is not acceptable that taxpayers should continue to bear the heavy cost of rescuing the banking sector. They should not be in the front line. I believe in the 'polluter pays' principle. We need to build a system which ensures that the financial sector will pay the cost of banking crises in the future.
âThat is why I believe that banks should be asked to contribute to a fund designed to manage bank failure, protect financial stability and limit contagion - but which is not a bailout fund.â
The EC is expected to present the proposals to ministers and heads of state at the forthcoming G20 meeting during June.
By Jim Ottewill