Banking body rejects resolution fund proposal

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Banking body rejects resolution fund proposal

Thu 27th May 2010

The British Bankers' Association (BBA) has criticised the idea of creating a pan-European resolution fund, suggesting it does not make economic sense.

BBA spokesperson Angela Knight claimed too many important questions are left up in the air by such a plan, such as why one country should pay for the problems of another.

In her view, an EU-wide tax or levy would not be prudent, since it would create a cushion that would "curtail the consequences of a bank failure".

Ms Knight remarked: "There is universal agreement on the principle that if a bank gets into trouble it is not the taxpayer who should pay."

She suggested national authorities should be in a position to intervene and more work needs to be done in terms of regulation and supervision.

This week, the BBA responded to the Queen's speech to parliament by offering to help the government develop the financial services regulation bill.

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