The UK government, which has endorsed the idea of ring-fencing retail, deposit-taking banking functions from activities such as trading and investment banking, says high net worth individuals will not be forced to put their money into such protected bank segments.

Proposals, contained in a white paper, also raised questions about what happens to Swiss banks, as their country of origin is outside the European Economic Area. The EEA status is important because, to avoid issues with cross-border banks, the UK government proposes that ring-fenced banks should not carry out any banking activities through non-EEA subsidiaries or branches.

Last week, finance minister George Osborne said the government will introduce legislation as soon as possible to push ahead with the ring-fencing idea, designed to ward off the risk of future massive taxpayer bailouts of banks.

A consultation on the white paper runs until 6 September.

At a time when investors are fearful about the economic plight of countries such as Spain and Greece, the document spelled out how much money has, since 2008, been spent on bailing out stricken banks. Across Europe, taxpayers have paid €288 billion (around $363.9 billion) in bank recapitalisations between October 2008 and December 2010. They are still being called upon to provide support, such as recent injections into the Franco-Belgian bank Dexia and Spanish bank Bankia.

The UK is far from alone in overhauling bank regulation. In the US, the so-called “Volcker rule” (named after former Fed chairman Paul Volcker, who proposed the idea) is designed to split trading activity from banking.

One challenge for policymakers has been to reform banks so that these often huge organisations do not overwhelm the ability of governments to rescue ordinary depositors from a collapse. The reforms are also designed to prevent bank failures leading to systemic crises. Some critics of the ring-fencing idea say that many of the most significant problems, however, did not originate with supposedly more risky functions such as investment banks, but in regular, mortgage-lending institutions such as the UK’s Northern Rock.