How to avoid the doom loop? The eurozone could easily fall into a self-reinforcing cycle of bank and government debt default. Christine Lagarde of the International Monetary Fund has a solution: more bank capital. There is a better way.
The cycle could start if sovereign debt worries cut off the supply of bank funding (the money needed to support operations). Morgan Stanley calculates that European banks need €80bn before the end of the year. That is not even 1 per cent of the outstanding sovereign debt in the European Union, but a shortfall could start a downward spiral of bank failures – if neither governments nor the European Central Bank were willing to replace fearful private investors.
您已阅读38%（699字），剩余62%（1155字）包含更多重要信息，订阅以继续探索完整内容，并享受更多专属服务。