New rules proposed to put an end ‘too big to fail’ banks | Reuters.
(Reuters) – Global regulators on Monday proposed new rules to ensure that bank creditors rather than taxpayers pick up the bill when a big lender collapses.
Mark Carney, chairman of the Financial Stability Board and Bank of England governor, said the plans marked a watershed in ending banks that are too big to be allowed to fail.
“Once implemented, these agreements will play important roles in enabling globally systemic banks to be resolved (wound down) without recourse to public subsidy and without disruption to the wider financial system,” Carney said in a statement.
After the financial crisis in 2007-2009, governments had to spend billions of dollars of taxpayer money to rescue banks that ran into trouble and could have threatened global financial system if allowed to go under.
Since then, regulators from the Group of 20 economies have been trying to find ways to prevent this happening again.
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