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The European Central Financial institution (ECB) is to push Eurozone banks to carry capital reserves towards their sovereign bond holdings, because it seeks to forestall weak lenders from shopping for up the money owed of nations left susceptible by the euro disaster.

Sovereign bonds are sometimes considered danger free, nevertheless, the brand new drive would power banks to carry capital reserves as a proportion of their sovereign bond holdings.

The shift could be launched as a part of the ECB’s “health check” of the Eurozone’s largest 130 banks, writes the Financial Times, including –

The vicious cycle that has seen banks use central financial institution money to purchase authorities bonds has been partly blamed for prolonging the Eurozone monetary disaster.

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