As a new vintage of bad debt ripens, supervisors at the European Central Bank (ECB) are walking a tightrope between allowing banks to argue that everything is alright and spurring policymakers in Brussels into action.
But the European Commission’s strategy for dealing with a post-Covid build-up of bad debt, published in mid-December, falls well short of chief ECB supervisor Andrea Enria’s wishful push for an EU bad bank.
The plan did not even include common funding for national bad banks.
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