The Finance Minister of Germany has urged that investors be more involved in future bank rescues in countries with financial issues. He quickly added that the Cyprus case is unique, especially when a bailout would impose losses upon depositors.
The comments were reported in Wirtschaftswoche, a German magazine after Wolfgang Schauble was pressed whether Cyprus was a one time case. He said, "The involvement of owners, bondholders and uninsured depositors has to be the norm if a financial institution runs into trouble."
He further added, "Otherwise we will never get a grip on the moral hazard problem whereby banks which do risky business make big profits but then burden the general public with their losses when they fail. That cannot be allowed."
Schauble defended fellow finance minister for the Netherlands, saying Dijsselbloem has been unfairly criticized for his comments on financial bailouts of countries. He said, "But he said Cyprus could be a 'template' for the future. Financial markets misunderstood that, thinking there was a risk of Cyprus happening elsewhere. But that is not the case because Cyprus is a very unique case."
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