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2012-12-10 09:34:07
Banking authorities in the UK and US have outlined their plans for limiting the damage if banks get into trouble.
Under the plans, one national regulator would be responsible for overseeing the insolvency of a big international bank instead of national bodies dealing with its subsidiaries in each country.
Shareholders would lose their money and people who had lent the bank money would end up owning it.
It is hoped it would stop governments having to step in to support banks.
The approach would also allow any remaining sound parts of the business to continue trading.
But BBC business editor Robert Peston pointed out that there was a danger if the proposals were successful.
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If successful, this should limit the costs to taxpayers and the wider economy in the next banking crisis
image of Robert Peston Robert Peston Business editor
"If banks are no longer considered too big to fail, the costs for banks of raising money would rise," he said.
"That means they would feel obliged to charge their customers rather more for loans and for keeping money safe."
The common approach came from the Bank of England and the Federal Deposit Insurance Corporation, which is the US institution that would compensate savers if a bank went under and also tries to limit the effects of bank failures on the economy.
Another idea is that big banks are forced to have enough funding at the top of their organisations to absorb losses, instead of spreading it around complicated organisational structures.
Management would be held responsible for bank collapses and replaced.
The plans would only cover the biggest international banks, referred to as globally active, systemically important, financial institutions, or GSIFI.