Capital hawks advocate bail-in flexibility for Italy
As stress-test results loom, experts say tackling legacy loans should take priority over bail-in purity
Advocates of stronger bank capital and regulation are calling for the European Commission to be flexible in applying new limits on bank bail-outs, just seven months after the legislation entered into force in January, to allow Italy to tackle high levels of legacy non-performing loans (NPLs) and weak bank balance sheets.
Europe's Bank Recovery and Resolution Directive (BRRD) limits member states from using public funds to bail out banks, instead requiring bondholders to take losses first – a
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