The European Commission has requested 11 member states, including Malta, to fully implement the Bank Recovery and Resolution Directive (BRRD).

This directive (2014/59/EU) is a centrepiece of the EU's Banking Union that was put in place to create a safer and sounder financial sector in the wake of the financial crisis.

The new BRRD rules equip national authorities with the necessary tools and powers to mitigate and manage the distress or failure of banks or large investment firms in all EU states.

The objective is to ensure that banks on the verge of insolvency can be restructured without taxpayers having to pay for failing banks to safeguard financial stability.

Instead, they provide for shareholders and creditors of the banks to pay their share of the costs through a "bail-in" mechanism.

The deadline for the transposition of these rules into national law was December 31.

The Commission's request takes the form of a reasoned opinion, the second stage of the EU infringement procedures. If these countries fail to comply within two months, the Commission may decide to refer them to the EU Court of Justice.

The other countries that failed to implement the directive are Bulgaria, the Czech Republic, France, Italy, Lithuania, Luxembourg, the Netherlands, Poland, Romania and Sweden.

The government also said it would reply to the European Commission in the coming weeks.

It said it was optimistic the infringement would be closed as the necessary legislation had already been moved in Parliament.

 

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