Authorities looking at alternative to taxpayer bailout
Governments and regulators around the world are set to discuss future banking bailouts which will not depend upon taxpayer money to support the system. When you consider that the UK banking bailout alone has literally cost hundreds of billions of pounds there is a need to put safeguards in place to cover any similar situations in the future. But what are the options?
The UK government has stepped forward with two particular options which will protect taxpayers in the future and transfer the liability to banking institutions themselves. The first option is an insurance policy which would cover any potential bailout cost in the future and would force each and every financial institution in the UK to pay a regular premium. The second option is a tax on each and every transaction in the financial sector which would help to build up a "bailout fund" which could be used as and when required in the future.
Both of these measures are a million miles away from the situation at the moment and there is no certainty they will ever come to fruition or be accepted by the financial community. However, something needs to be done to safeguard taxpayers in the future.
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