Europe’s finance ministers are expected to agree on Friday to guidelines for handling cross-border banking failures, their first steps to address potential threats brought on by the tight credit markets.
In a sign of the growing concern over the international banking system, European ministers will sign an agreement promising deeper European cooperation, and establishing principles to be applied when a financial institution operating in different countries faces difficulties.
However, the document will not propose creation of a European regulator or lay down strict rules. Instead it will bind the national authorities to favor private-sector rescues where possible, and urge them to decide in advance who would pay the bill for banks that operate in more than one country if a state bailout is required.
Europe to Approve Guidelines on Bank Failures - New York Times
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