LCR risk strengthening bank-sovereign nexus as peripherals pig out

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By Craig McGlashan
15 May 2014

Far from unpicking the bank-sovereign links behind the eurozone debt crisis, regulators risk reinforcing them through the Basel III liquidity coverage ratio, writes Craig McGlashan.

Although periphery yields are tumbling, concern centres on the likelihood that every eurozone sovereign will gain level one LCR status while the rules force smaller banks to buy government debt.

Level one status for sovereigns “will do nothing to break the bank-sovereign nexus,” judged Richard McGuire, head of ...

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