January 15, 2013 1 Comment
A European Commission proposal for bank rescues recently leaked to the Financial Times suggests that euro area officials may not be ready after all to break the destructive loop between banks and their sovereigns.
Why on earth was anyone surprised? Germany and its north European allies have never been willing to back a system in which they would have to accept risk for debts incurred by banks in other euro area countries. That’s unlikely to change soon. Read more of this post