If the aim of governments is to restore the banking system to profit, they may unwittingly be succeeding quicker than they can have imagined.
Commercial banks are being completely rational by parking their much-prized liquidity at the short end. They buy three-year government guaranteed debt yielding something like 2.6% (using the UK as an example, but the same holds for the eurozone) and then place that with the central bank at a little over 1% – earning a risk-free return in excess of 150 basis points....
