Are the days of spectacular bank failures that the world has witnessed since the onset of the global financial crisis in 2008 numbered? After four years, the European Commission Wednesday finally came up with proposals it says would “allow effective intervention before banks get into insoluble difficulties and (would) ensure that restructuring and resolution costs fall upon bank shareholders and creditors rather than the public purse”. In reality the proposals give banking regulators in member countries “new” powers of “prevention”, “early intervention” and “resolution”, with intervention by the authorities becoming more intrusive as the situation deteriorates. The euro zone countries pledged at previous G20 meetings to set up crisis prevention and crisis management frameworks for banks, especially those involved in cross-border business. The timing of the announcement had a touch of the surreal. It comes in the wake of urgent calls from the G8 meeting in the US and from members of the upcoming G20 summit in Mexico, for Europe to get its act together and to sort out the euro zone sovereign debt and banking crisis once and for all. On Thursday British Prime Minister David Cameron was in Berlin urging Chancellor Angela Merkel that “speed is of the essence” in restoring stability and market confidence in the 17-nation euro zone, and that there is a need for an immediate plan. That is easier said than done as the last two years have shown. For, there are key ideological differences in the proposed solutions to the euro zone crisis. Cameron and Merkel may be bedfellows in austerity and balancing the national books, but they sharply differ on the use of the European Stability Mechanism (ESM) bailout fund, which is due to come into force soon. Germany too is keen on a longer term plan for promoting euro zone monetary and fiscal stability, and greater financial and fiscal union, which the UK is against. The UK, albeit not in the euro zone, supports the call of Spain, Greece, Cyprus, Ireland and Portugal that the bailout fund be used to urgently recapitalize struggling banks directly. At the same time various governments are faced with elections __
