Doomed loop: Europe gets creative on sovereign bond risks

Political and prudential risks in huge bond-holdings force experts to consider new ideas

downward-loop-doomed-loop-web
Doom loop: but a fix means tackling the status quo

It came to be known as the ‘doom loop' – the mutually destructive relationship in which government bond-laden European banks weighed on the creditworthiness of their states, threatening the survival of both. But while the phenomenon has had a neat label for at least five years, it still lacks a neat solution.

That is not because there isn't one, but because any fix means tackling the status quo, whereby banks can hold domestic government bonds without a capital cost – a stance that makes little

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here