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ECB urges EU Commission to present resolution scheme

Published on Dec 5, 2012 11:06 PM

FRANKFURT (REUTERS) - The European Central Bank (ECB) has urged the EU Commission to come up with a plan for a central mechanism to wind down banks in order to assure the euro zone's financial system functions even if some banks are in trouble.

The resolution scheme is one of three pillars that form the banking union that aims at underpinning lenders and the euro currency. The other two are a new banking supervisory body and a combined means of deposit protection to prevent bank runs.

"The ECB calls on the Commission to urgently present a separate proposal for an independent European Resolution Mechanism, including aspects of a common European Resolution Fund," the ECB said in a legal opinion.

This resolution fund "would, as a minimum, be financed by the financial institutions", the bank added.