European finance ministers yesterday agreed a deal on new rules to shift the burden for future bank rescues from taxpayers to the financial sector in a bid to quell public anger over massive bailouts in recent years.
The measures, which still have to be adopted by the European Parliament, will force bank owners and bond holders firstly and then depositors with more than 100,000 euros (US$130,000) to bear the losses.
“Our aim is to have a common approach throughout Europe so our taxpayers no longer have to shoulder the burden,” said Irish Finance Minister Michael Noonan, who chaired the talks as current holder of the EU presidency.
Noonan said governments would no longer have to save banks that were “too big to fail” as the deal would end the “vicious link” that forced countries to step in and rescue lenders in order to prevent wholesale collapse.
The agreement on a key stumbling block for European integration came just ahead of the start of a summit of EU leaders that will aim to tackle another aspect of the crisis fallout — the sharp rise in youth unemployment.
The crux of the issue was who should foot the bill when a bank fails, and what room for maneuver governments can have to decide on a rescue strategy after the widely differing experiences seen in Europe in recent years.
Under the proposed rules, public funds to rescue banks would only be allowed exceptionally after a minimum level of losses equal to 8 percent of the total liabilities.
“This establishes ‘bail-ins’ as the new rule,” Noonan said, referring to a term for forced losses put on the bank instead of “bailouts” which use public funds.
The Irish presidency said it hoped the new rules would be finalized by early next year at the latest and the plan is that they would then come into effect from 2018.
“This is very important for financial stability in the EU,” French Finance Minister Pierre Moscovici told reporters as he came out of the talks.
Up to now, the taxpayer has paid for most of the state and bank bailouts — a massive sum put at 4.5 trillion euros for the period from 2008 to 2011, which has stoked growing popular disquiet and added to debt levels.
The resolution mechanism is a key step toward a “banking union,” the new overall EU regulatory framework meant to restore the banking sector to health and so prevent any repeat of the bloc’s debt crisis.
However, further steps towards banking union and greater integration between eurozone members are not expected any time soon as most analysts are expecting a pause for Germany’s general election in September.
An EU diplomat speaking on condition of anonymity said that the easing of the eurozone debt crisis meant there was no longer the same sense of urgency for reforms.
“The project seems to be moving forward, but much slower. There is a realization that they have to go ahead with integration, but it’s not happening at breakneck speed,” the diplomat said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”