The European Union unveiled on Tuesday a long-awaited new plan of measures that would protect taxpayers from bailouts for troubled banks, after the recent turmoil in the banking sector in both the United States and Europe.

The proposed text, which will be negotiated by the member states of the European Union and members of the European Parliament, aims to encourage troubled medium and small banks to use the banking sector’s funds instead of public funds, according to what the European Commission announced, the executive arm of the bloc.

The European Union faced pressure to move quickly in the wake of the bankruptcy of three US banks last month and the merger of the giant Swiss bank Credit Suisse with its regional competitor , UBS .

"The recent failures of some US and Swiss banks, and the resulting crisis in the international banking sector, are just a reminder that we need a strong effective system to deal with all banks of any size when they face problems," Commission Vice-President Valdis Dombrovskis said during a press conference in Strasbourg.

The European Union seeks to prevent its members from pumping taxpayers' money into medium-sized banks, and to force banks to build up their own reserves.

In the past, medium-sized banks had difficulty accessing solutions programs financed by the banking sector, which represented a blow to owners of deposits whose value exceeded those secured by deposit insurance programs. Necessary to launch solutions programs, which contributes to reducing the risks of spreading panic and rushing to banks.

"Let me stress that the first and main line of defense in such a crisis should be the banks' internal capacity to absorb losses," Dombrovskis said.

And the European Parliament and the 27 member states of the Union must approve these proposals, which are likely to meet strong opposition from countries in the north, including Germany.
Berlin is concerned about the implications of the European Union's plans for its programs to protect lenders such as banking cooperatives.

However, the measures announced on Tuesday are not a direct response to the recent banking turmoil, but rather come within the framework of the European Union's attempt to complete a banking union that has stalled for years since its inception in 2014.

Brussels launched a radical reform of banking supervision after the 2008 financial crisis and the successive debt crisis in the eurozone.

During both crises, billions of euros of depositors' money were spent bailing out banks.
The dispute has emerged over the last pillar of the banking union, an EU-wide deposit insurance scheme that Germany, Europe's largest economy, vehemently opposes.

The plan did not address reforms and the commission said they were still pending.
Germany and other EU countries fear they will have to pay for the failures of member states' banks under such a plan.

The reforms will only be a new source of tension between Berlin and Brussels.
Germany, a leader in the auto industry, last month blocked a landmark agreement to ban sales of new fossil-fuel cars from 2035, but gave the go-ahead after further talks.