Italy’s parliament on Thursday approved the country’s contribution to the EU’s single resolution fund that, from next year, will be used to protect tax payers from footing the bill in bank rescues.
The European Union directive, known as the Bank Recovery and Resolution Directive (BRRD), will impose losses incurred in a bank rescue on shareholders and creditors in a process known as “bail-in”, before any taxpayers’ money can be tapped.
The lower house gave definitive parliamentary approval to the so-called inter-governmental agreement, which had already been passed by the upper house Senate.
The agreement signed last year foresees building up a regional fund worth 1 percent of total deposits, or about 55 billion euros (£38.61 billion), over eight years. Italy’s annual contribution is estimated at more than 600 million euros.
The EU drew up the new rules in an effort to prevent a repeat of the 2008 financial crisis, when a number of governments had to salvage failing banks at huge expense.
EU states like Italy had to adapt national laws to bring themselves into line with the norms.