German bigwig calls for tough line on bank support

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By Jasper Cox
16 Oct 2018

Burkhard Balz, a member of Deutsche Bundesbank’s executive board, warned on Monday that certain tools to support struggling banks, such as precautionary recapitalisation and liquidity provision, should be used sparingly.

Balz said that precautionary recapitalisation should not be used as a political instrument to avoid resolution and should only be used in exceptional circumstances.

Banca Monte dei Paschi di Siena was granted a precautionary recapitalisation last July, allowing the Italian government to put money into the ailing lender.

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