Italian banks' government debt risks: real or just deja-vu?
A plunge in shares in Italian banks, sparked by rising government bond yields, has reawakened memories of the 2011-12 debt crisis and rekindled concerns over lenders' vulnerability to sovereign risks.
The sovereign-bank link, which became a "doom loop" of mutually reinforcing risks a decade ago, compounds problems for Italian lenders, which are down by a fifth this year, nearly twice the loss of the wider European
Nudged by regulators to diversify sovereign risks, Intesa and UniCredit have cut domestic bond holdings to 70%-80% as a proportion of their core capital.
Reuters 20 June 2022
Analysis: Italian banks' government debt risks: real or just deja-vu? | Reuters
Lagarde Restates ECB Hiking Plan
The measure is meant to be finalized before the ECB’s Governing Council next scheduled policy meeting on July 20-21, people familiar with the matter have said. Lagarde said that work is under way, and declined to divulge details on how it’s supposed to function.
“Suffice to say that fragmentation will be addressed if the risk of it arises,” she told lawmakers. “And it will be done so with the appropriate instruments, with the adequate flexibility, it will be effective, it will be proportionate, it will be within our mandate. And anybody who doubts that determination will be making a big mistake.”
The deposit rate currently stands at -0.5%, having been negative since 2014.
Bloomberg 20 June 2022
ECB Tool to Avert Debt Crisis 2.0 Takes Shape
https://englundmacro.blogspot.com/2022/06/ecb-tool-to-avert-debt-crisis-20-takes.html
Kommentarer