Europe’s banks still have very large amounts of non-performing loans on their books. According to some estimates, they amount to close to 1,000 billion euro.
The problem is particularly acute in Italy, which accounts for about a third of the euro area’s total. These problem loans are perceived as a big problem.
Some have argued that plans to complete the Banking Union must be postponed until the NPLs have been dealt with.
Others have argued that dealing with the NPLs is needed for a sustained recovery, because, as so often argued, banks will not lend if they have these loans on their balance sheets. However, this view might be mistaken.
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© CEPS - Centre for European Policy Studies
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