But this legacy [of bank financing of trade deals] is now under threat in Europe from new regulation aimed at preventing another bank bailout.
That’s right. The EU has decided that tools banks use to finance trade agreements between other parties must be regulated by the Know Betters of the European Commission.
The new rules are designed to shield taxpayers from bailing out distressed financial institutions again[.]
“EU authorities” are, as usual, operating from a false premise. There’s no need for a government entity to bail out, or to avoid bailing out, any bank. Banks don’t need bailing out. It’s all right if they fail. It’s good, in fact, for bad banks (e.g., those otherwise thought to need bailing out) to fail; that’s how dead wood gets got rid of.
It’s really quite simple, for all that government experts have over-complexified the thing. The way to not to bank bail-outs is to not bail them out. Let the free market decide a bank’s (or any enterprise’s) fitness to continue operations, and if the market turns thumbs down, let the bank fail. Full stop.