Trading firms could withdraw deposits held at a failing bank sooner than originally planned under draft European Union rules, a proposal from the bloc’s president showed. The aim of the draft rules is to temporarily stop withdrawals of funds from a lender that is failing or likely to fail in order to prevent bank deposit runs.
Under the EU plan published last June, there would be a moratorium or suspension of payouts for five working days, but critics said such a long period could spark panic in markets. Bulgaria, which holds the bloc’s rotating presidency, has proposed cutting the planned moratorium to two business days. This would help avoid “unintended consequences” to financial markets, an EU document due to be discussed at a meeting of EU member state officials showed.