Senior bondholders could be required to shoulder the burden of
losses of European banks in place of taxpayers, according to a
consultation paper released by the EC.
Published on January 7 2011, the consultation paper suggests
the introduction of possible mechanisms to write down
appropriate classes of the debt of a failing bank to ensure
that its creditors bear losses.
In a failure scenario, authorities could have the power to
forcibly write-own debt or to transfer assets and liabilities
of a failing bank to another institution or bridge...