Agreement on the Transfer and Mutualisation of Contributions to the Single Resolution Fund
The European Union recently reached an agreement on the transfer and mutualisation of contributions to the Single Resolution Fund (SRF). The SRF is a fund that was established after the financial crisis of 2008 to ensure that failing banks could be resolved in an orderly and efficient manner, without taxpayer funds being used.
The new agreement on the transfer and mutualisation of contributions to the SRF is a significant milestone in the continued strengthening of the European banking union. It is aimed at ensuring that the SRF has the necessary resources to support the resolution of failing banks, while also making sure that the burden of contributions is shared fairly across the EU.
Under the agreement, contributions to the SRF will be gradually mutualised over a period of eight years, starting in 2024. During this period, national contributions will be gradually reduced as a proportion of the total SRF amount, and replaced by EU-wide contributions.
The agreement also includes measures to ensure that smaller, less risky banks are not unfairly burdened with contributions to the SRF. Banks with lower risk profiles will be able to make contributions to the SRF that are proportional to their risk, rather than being subject to a fixed contribution amount.
In addition, the agreement will allow for the SRF to be used to support the resolution of failing banks outside of the eurozone, subject to certain conditions being met. This will further strengthen the EU`s ability to respond to financial crises and support financial stability across the region.
Overall, the agreement on the transfer and mutualisation of contributions to the SRF is a positive development for the European banking union, and for financial stability across the EU. By sharing the burden of contributions and ensuring that all banks are contributing fairly, the EU is taking an important step towards a more resilient banking sector.