Journal of
Italian
Banking
Association
year 100
Italian
Banking
Association
year 100
Sovereign exposures in European banks, a new sustainable framework
Franco Tutino, Diego MoscaJune 2018 - n. 6
Jel codes: G21, H63, G18
The debate on banks’ sovereign exposures can be pursued using two different approaches: the rise of capital ratios in terms of credit risk, the reduction of concentration risk through a disincentive mechanism. To be effective and sustainable, the new framework must retain two assumptions: the systemic nature of sovereign risk could make any capital requirement insufficient to cover bond portfolios losses; the new limits should not jeopardize banks’ role in financing public debt and in ensuring credit to the economy.
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