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Translated from the German
"Currently, there is one particular point that we need to tackle: a proper framework for the rehabilitation of insolvent banks, as well as a uniform mechanism for bank resolution. In a liablity cascade owners, creditors and major investors will be liable before the taxpayer will have to jump in. This is the way it should be. This is just. Banks bail out banks, that is the basic idea. For this, a settlement fund is to be set up which banks will have to pay into. In this way, bank bailouts would finally be decoupled as far as possible from national budgets and the toxic connection between bank debt and public debt would finally be broken.
The national point-of-view may lead to the rash opinion that it is unfair that now banks in one country will have to support banks in another country. But this national view ignores the fact that in reality this is an insurance mechanism for all banks and that it would be even more unfair if taxpayers had to step in - and it also ignores the fact that banks usually operate transnationally, but die nationally and that the impact of bank failures do not stop at national borders. So we will be well-advised to find European solutions for this European problem: a European supervision and a European resolution fund.
Now, however, we are faced with the practical problem that it will take some years before a resolution fund will have received enough actual payments for it to become operational. So we need an interim solution until the EU resolution fund is operational. But what such a solution might look like is very much the subject of debate at the moment.
National resolution funds keep being mentioned in this context. That's only fair, according to the national outlook. But this will lead to further problems, from a European view. De facto, we would then reintroduce state liability, and the potential for blackmail by the big banks - the "too big too fail" all over again. De facto, it would again be the taxpayers who would have to pay for bank failures.
Furtheremore, the question arises as to whether large banks might be encouraged by a system of 18 national resolution funds to close their branches in those countries where they face weak protection. That may sound very theoretical, but is in fact already happening. At the beginning of the crisis, countries such as Poland and Hungary made the unpleasant experience that for example Austrian banks withdrew from the neighbouring countries. Were this to happen to the southern European countries, the local credit crunch would worsen.
The position of the European Parliament is clear: Supervision should be based at the ECB and a branch of the Commission should have the decision-making authority over the closure of banks: this would lead to significantly faster and more neutral decisions. Supervision only works effectively when resolution and restructuring are possible in a credible way."
Full speech (in German)