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Member states are torn between the need to restructure their sick banks, and the desire to protect them from rivals in neighbouring countries, Nicolas Véron argues. Furthermore, the Commission possesses neither the political leadership, nor the resources and skills, nor the policy tools to make much of a difference. And finally, the ECB has enough to do on the monetary policy front. It cannot single handed take over the burden of supporting ailing banks.
Véron argues that the scenario whereby a major cross-border European bank would be found insolvent in the short term is becoming ever less improbable. Yet we have no credible policy framework to tackle it, he warns.
At present,
The article “The European Banking Gordian Knot” was published in French in La Tribune,
The full article is attached below