BRUSSELS Jean-Claude Trichet, European Central Bank president, has succeeded in killing a proposal for European Union member states to agree detailed plans for a public bail-out of a failing bank, designed to stop financial chaos spreading across the continent.
Mr Trichet was backed by Mervyn King, governor of the Bank of England, in arguing at a meeting in Berlin that ex-ante plans for a publicly funded rescue operation would send the wrong signals to markets. Both feared that the proposal, pushed during last year’s Finnish presidency, would lead to significant moral hazard if the markets believed that finance ministers and central bankers would intervene to save a big bank.
