ECB Draghi To Outline Banking Probes

The closets of Europe’s banks will be examined next year, with increasing concerns about what skeletons might emerge.

Mario Draghi, President of the European Central Bank (ECB), is expected to outline the criteria for the bank’s Asset Quality Review (AQR), its stress-test of banks’ balance sheets, on Wednesday. This will be the first time that the ECB announces just how stringent its review will be.

There seems to be universal agreement that these tests are: a) very important and b) potentially damaging to a lot of banks. They will be one of the most important steps in the movement towards Europe-wide banking union.

Europe’s banks were at the core of the region’s three-year financial crisis, trapping their governments in a “debt spiral” of dependency. After falling victim to the global financial crisis, a large number of Europe’s banks needed propping up by their governments. To be able to afford this, the governments issued debt – making their finances shakier as a result.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza