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23.11.201006:33:00UTC+00Banks' Debt Holdings Must be capped to Avoid Threats : German Govt Advisor

News

  • German govt advisor said that caps must be set on the amount of debt lenders can hold.
  • Jan Pieter Krahnen said that a circle of banks loading up on risky debt may already have taken root due to "non-existent but much-needed rules" on asset holdings.
  • He said that banks would continue to take excessive risks as long as they knew they would be bailed out if necessary.
  • Krahnen said that a big reason for a rise in banking risk was that prices had been distorted by cheap money from Cbanks.
  • He further said that the banks are part of "the systemic risk scenario."

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