Europe Wants to Make It Easier to Wind Down Medium-Sized Banks

The European Union wants to make it easier to wind down medium-sized banks that fail by tapping national deposit guarantee systems for funding, according to people familiar with the matter.

In a proposal due around mid-April, the European Commission would faciliate using these funds to bridge gaps at banks that don’t have sufficient reserves and avoid tapping uninsured depositors, said the people, who asked not to be named because the plan isn’t yet public. The option would be limited to banks that will leave the market, the people added.

Europe came up with new rules for failing banks to avoid ...