EU Covid policies resurrect sovereign doom loop fears

Italian banks could see holdings of home country debt increase to 17% of their total assets

Eurozone banks’ holdings of sovereign bonds issued by their home governments could increase by half over the next two years, as states sell increasing amounts of debt to recover from the coronavirus crisis. This will bind banks and sovereigns closer together, perhaps giving rise to a new iteration of the so-called ‘doom loop’ – the corrosive relationship in which government bond-laden lenders