Merkel's EU bailout plan threatens Basel’s sovereign zero risk weights
Discussions are already under way behind closed doors, knock-on effects for bank capital could be substantial
If German chancellor Angela Merkel's reform plans for EU sovereign bailouts become reality, the Basel Committee on Banking Supervision may have to revise the risk weightings it assigns to sovereign debt, say three well-placed regulatory experts.
Politicians in Germany are infuriated that peripheral eurozone nations have been propped up at state expense - avoiding a default or restructuring, which would cost investors - and Merkel wants to introduce a mechanism through which bondholders would
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