As of January 1, 1016 major depositors will be first in line to bail-in collapsing banks along the lines of the Cyprus model. This is good and proper, were it not that the EU is changing the goal posts during the game. Investors may vote with their feet
Jeroen Dijsselbloem, president of the Eurogroup and president of the Board of Governors of the European Stability Mechanism (ESM)
The European Parliament has put forward a new mechanism to deal with bank failures in which major depositors in collapsing banks are tapped first in an effort to support the lender.
Deposits below 100,000 euro ($137,700) will be exempt from any losses, and bigger deposits from individuals and small businesses will receive preferential treatment, says Reuters.
The proposal was made following a 16-hour marathon negotiating session in Brussels. The authorities intend to start the mechanism on January 1, 2016, two years earlier than expected. It now goes to EU ministers for approval next week.