#bail
Bank Bail-in since 2016 in EU
Bail-ins work a little differently, providing immediate relief. Banks use money from their unsecured creditors, including depositors and bondholders, to restructure their capital to stay afloat. Put simply, they can convert their debt into equity to increase their capital requirements. Although depositors run the risk of losing some of their deposits, banks can only use deposits in excess of the $250,000 protection provided by the Federal Deposit Insurance Corporation (FDIC).
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Europe Experiments With Bail-Ins
One of the key examples of the use of bail-ins was in Cyprus, a country saddled with high debt and the potential for bank failures. The country's banking industry grew at an alarming rate after Cyprus joined the European Union (EU) and the Eurozone. This growth, coupled with risky investments in the Greek market and risky loans from two large domestic lenders, led to the need for government intervention in 2013.[ref]In 2013, the EU introduced resolutions to make the bail-in a common principle by 2016 in response to the effects of the European Sovereign Debt Crisis. It transferred the responsibility of a failing banking system from taxpayers to unsecured creditors and bondholders, the same way Dodd-Frank did in the United States[ref]
source: https://www.investopedia.com/articles/markets-economy/090716/why-bank-bailins-will-be-new-bailouts.asp
#bank #bail #fail #bailin
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