Andritzky, Jochen, Gadatsch, Niklas, Körner, Tobias, Schäfer, Alexander, Schnabel, Isabel, (2016), “A proposal for ending the privileges for sovereign exposures in banking regulation”, Voxeu, 4 March.
The excessive exposure of banks to sovereign debt continues to threaten the stability of the Eurozone. Based on a recent proposal by the German Council of Economic Experts, this column suggests steps towards severing the sovereign-bank nexus. The loss-absorption capacity of banks could be increased through risk-adjusted large exposure limits and risk-adequate capital requirements.
Relevant Posts
- Glinavos, Ioannis, (2013), “Redefining the Market-State Relationship-Responses to the Financial Crisis and the Future of Regulation”, Routledge publications, Routledge Research in Finance and Banking Law series, September.
- Vives, X. (2015), “A framework for banking structural reform“, VoxEU Organisation, 17 March.