The head of the International Monetary Fund posts that the European Union is in a great need for a new body to deal the collapse of cross-border banks that operate across several countries quickly and cost-effectively.

Strauss-Kahn at a European Commission conference on managing cross-border banking failures, quoted, "What I think is needed is a European Resolution Authority, armed with the mandate and the tools to deal cost-effectively with failing cross-border banks".

The need persists as the existing plans have all proved to be unsuccessful making cross-border bank failures cumbersome to handle and more costly than necessary.

In addition, he is calling for a new European authority to handle the insolvent banks that would force shareholders and uninsured creditors to bear the costs of failure.

For the system to be robust, it certainly needs a financial assistance and a fiscal back-up mechanism to shield any net resolution costs which would involve burden-sharing between EU countries, he explains.

In addition, he believes that the new body should be part of a broader crisis management system that would be financially backed by the industry via deposit insurance fees and levies on the financial institutions which are expected to use it, said Strauss-Kahn.