Quote: After the 2008-09 financial crisis, countries such as Ireland, Britain and Germany had to pump dozens of billions of pounds and euros in fresh capital into ailing banks to prevent the financial system collapsing.
To avoid that happening again, finance ministers discussed who should contribute in which order so that ordinary taxpayers are not left with the bill.
"Bail-in is now the rule," Ireland's finance minister, Michael Noonan, said. The rules put an end to moral hazard by making it clear that banks would suffer before the government might come in to help, if at all, he said. "This is a revolutionary change in the way banks are treated."
The rules foresee that banks' creditors and shareholders would be the first to take losses. But if that were not enough to prop up the lender, small companies and ordinary savers holding uninsured deposits worth more than 100,000 euros (£85,000) would also take a hit, officials said.
Those forced losses would go as high as 8% of a bank's total liabilities. Only then would national governments kick in and top it up with a bailout possibly worth another 5% of the liabilities.
The negotiations were complicated because some nations feared being bound by overly rigid European rules. Others warned that too much flexibility would create new imbalances between the bloc's weaker and stronger economies and a lack of common rules would destroy certainty for investors and erode trust in the financial system.
But the rules will now apply equally for the 17 EU nations sharing the euro currency and the 10 member states, including Britain, that have their own currency, Dijsselbloem said. | 
