ROME Dec 9 So called 'bail-in' rules that
impose losses on bank investors, bondholders and even current
account holders if a lender needs to be rescued can undermine
the confidence of small savers in the banking system, a Bank of
Italy official said on Wednesday.
"The bail-in can exacerbate - rather than alleviate - the
risks of systemic instability caused by the crisis of individual
banks," Carmelo Barbagallo, head of supervision at the central
bank, said during a hearing before the Chamber of Deputies.
"It can undermine confidence, which is the essence of
banking; transfer the costs of the crisis from taxpayers at
large to a smaller category of people no less worthy of
protection - small investors, pensioners - who directly or
indirectly invested in bank liabilities."
(Reporting by Stefano Bernabei, writing by Agnieszka Flak)