The European Union is moving ahead with plans to shield taxpayers from having to bail out big banks in the future, but there are substantial obstacles to making bondholders share losses.
The EU's executive Commission on Thursday presented plans that could give national regulators the power to force the owners of bank bonds to accept so-called haircuts — a reduction in the amount of money they are owed.
But the Commission stressed that any new bond rules would not affect existing debts — an issue that is closely watched in Ireland, where the government's commitment to guarantee struggling banks' debts pushed the country to the brink of default.'
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