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Sovereign Debt in Bank Balance Sheets

Summary:
In the FT, Martin Arnold reports about estimates by Fitch according to which European banks would have to raise up to €170bn of extra capital or sell almost €500bn of sovereign debt if regulators push ahead with plans to break the “doom loop” tying lenders to their governments … The European Commission and the European Central Bank support steps in that direction while some European governments oppose them.

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In the FT, Martin Arnold reports about estimates by Fitch according to which

European banks would have to raise up to €170bn of extra capital or sell almost €500bn of sovereign debt if regulators push ahead with plans to break the “doom loop” tying lenders to their governments …

The European Commission and the European Central Bank support steps in that direction while some European governments oppose them.

Dirk Niepelt
Dirk Niepelt is Director of the Study Center Gerzensee and Professor at the University of Bern. A research fellow at the Centre for Economic Policy Research (CEPR, London), CESifo (Munich) research network member and member of the macroeconomic committee of the Verein für Socialpolitik, he served on the board of the Swiss Society of Economics and Statistics and was an invited professor at the University of Lausanne as well as a visiting professor at the Institute for International Economic Studies (IIES) at Stockholm University.

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