The European Commission said today it wants to give European regulators greater powers to manage the collapse of financial institutions, to ensure that bank shareholders and creditors, not tax payers, pay the cost of bank failures.

Numerous banks, with operations across the EU, came to the brink of collapse during the financial crisis, forcing national governments to bail them out through equity injections, debt guarantees and other measures. Without proper laws to cope with the aftermath of major bank collapses, governments chose to bail out bank shareholders and bond-holders, rather than risk the impact of an uncontrolled bank insolvency on the financial system and the economy.