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EU finance watchdog will not force bank bailouts

European regulators will not be able to force national governments to use taxpayer money to rescue struggling banks, EU internal markets commissioner Michel Barnier has said.

In an interview with the BBC, Barnier said that there was “disagreement” about whether a government should be compelled to rescue a failing bank by the European Union.

The UK government has been resisting proposals from other EU governments to give the new regulator all-encompassing powers to force bailouts.

He said: “Both sides will have to move but I know the red lines of the UK government, which is shared by others on fiscal sovereignty, and I think those lines will be respected in the final agreement.”

Barnier also said he personally agreed for calls for the global tax on financial transactions, known as the Tobin tax, to be introduced. He also called for a different tax or levy on banks in Europe, which would see the proceeds placed into special funds designed to help meet the costs associated with winding up banks that could run into difficulty in the future.

Barnier also wants a new European authority to oversee the credit rating agencies as part of the overhaul of financial regulation in Europe.

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