The European Commission asked on Thursday Bulgaria and ten other member states to fully implement the Bank Recovery and Resolution Directive (BRRD).

BRRD is central to the EU's Banking Union, which was established to create a safer and sounder financial sector and ensure the stability of banking services, the Commission's press service informs.

The directive provides the national authorities of member states with the necessary tools and powers to mitigate and manage the distress or failure of banks or large investment firms in the EU.

The aim is to ensure that banks threatened with insolvency can be restructured without taxpayers having to pay for them to ensure financial stability.

Instead, the shareholders and creditors of the banks are provided with the opportunity to pay their share of the costs through a “bail-in” mechanism.

The deadline for the transposition of the directive into national law was 31 December 2014, but eleven member states, including Bulgaria have failed to implement the rules.

The request of the Commission represents a reasoned opinion, which is the second stage of the EU's infringement procedure.

In case the countries fail to comply within two months, the Commission can decide to take them to the EU Court of Justice.

BRRD was adopted in the spring of 2014 and provides comprehensive and effective arrangements to deal with failing national banks and cooperation arrangements to prevent cross-border failures.

The directive requires banks to prepare recovery plans to overcome financial distress and authorities are granted powers to intervene in operations of banks to prevent them from failing.