The financial crisis is still hitting families and businesses across Europe hard. We can’t let such a crisis happen again and we can’t allow the actions of a few in the financial world to jeopardise the rest of society.

The IMF estimates European banks made losses close to €1 000 billion between 2007 and 2010. And it is taxpayers all over Europe who have been hit with the full cost of saving the financial system (€ 2 000 billion). No banker should have a free ride， incurring losses at taxpayers’ expense.

That’s why today the European Commission brought forward proposals to change the behaviour of the 8000 banks that operate in Europe so they don’t repeat the mistakes of the past. Banks have taken too many risks， including investing in dodgy products and lending too much without checking loans could be paid back.

By doing this， they exposed themselves to excessive risk and weakened both the borrowers and themselves.

Our objective is greater responsibility. Our proposal will require banks to hold more and better capital. Just as families try to put aside money for a rainy day， so banks too must have adequate capital reserves to deal with unexpected shocks and bad times.

We also want supervisors to monitor banks more closely and take action when they spot risks， for example to reduce credit when it looks like it’s growing into a bubble.

We aren’t trying to stop banks lending. On the contrary， it is essential banks help people take out a mortgage or a loan for their business. But they must do so in a responsible way.

Checks and balances imposed from the outside won’t be enough to make banks change their ways. Their whole culture needs to change from the inside. Banks need to be better governed: we’ll require boards to hold the bank’s managers to account， or to ensure that risks are better analysed and acted upon.

We have all been shocked to see poorly performing banks continue to doll out cushy bonuses to their executives. Today’s proposals will help put an end to that. If capital levels of a bank fall too far， bankers’ bonuses and payouts to shareholders should be put on hold until the bank has shored up its defences.

Banks must also be less dependent on the three big credit rating agencies， whose track record is far from perfect. Big banks should do their own homework and thoroughly assess how worthy an investment is rather relying on external ratings in an automatic and mechanical way.

We also need to recognise that times have changed: many banks are no longer national， but international. If we don’t have common rules at European level， who should an international bank be responsible to? Regulation and supervision need to be organised jointly in the EU to be effective. And when the rules are broken， we need stronger sanctions. All national supervisors should be able to impose deterrent fines， and have whistle-blowing programmes to improve the detection of violations.

We are implementing all these rules because they are right and they will make Europe’s financial sector safer and sounder. We are the first in the world to take these steps [and implement the socalled Basel III agreements signed up to by all G20 members]. But acting alone won’t be enough. We also need all our major international partners to do the same to help to secure financial stability globally and to provide a firm foundation for sustainable economic growth.

Don’t fall into the trap of looking at these rules for banks in isolation. They are part of a much wider response to the financial crisis. The European Union has already put in place better protection for your savings if your bank goes bust. Banks are answerable to financial watchdogs that can look across national boundaries. And we’re currently making progress to ensure all financial actors and markets are properly regulated. Not excessively but enough for us to feel confident in the integrity of our financial system.

Only when this system is in place can we really say we’ve learnt the lessons of the crisis and we’ve got a financial sector that does what it should: providing capital and creating jobs and growth， rather than punishing taxpayers.

(Author: Member of the European Commission responsible for the Internal Market and Services)