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Bank holdings of "risk-free" paper under scrutiny by Basel

  • Discussions are at an early stage, but Basel is looking at ending traditional banking industry practice of treating government paper as risk-free after the European PIIGS proved the debt is anything but. A change could potentially force lenders to raise billions in additional capital.
  • Needless to say, bankers aren't pleased, but sovereigns - used to having banks being large happy holders of their debt - are likely going to be pushing against any rule change as well. In Europe, Italian banks own more than €400B of Italian government debt, while Spanish lenders own nearly €300B of their country's sovereign paper.
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Comments (2)
  • PalmDesertRat
    , contributor
    Comments (2941) | Send Message
     
    Greece was once considered "risk-free" by the regulators, including the Europeans. Banks were clear to lend unlimited amounts to Greece with no capital allocation required. Look what happened.
    7 Jul, 09:45 AM Reply Like
  • vikramnjnjjdjnd
    , contributor
    Comments (667) | Send Message
     
    Long wfc, San, nbg
    7 Jul, 10:19 AM Reply Like
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