he president of Germany’s central bank has warned of rising levels of government debt on bank balance sheets and has called for a regulatory overhaul.
Writing in the Financial Times, Jens Weidmann, head of the Bundesbank, said the “deadly embrace” in which banks with heavy exposure to euro zone sovereign debt need rescuing, needs to be broken.
According to him, rather than cutting back on sovereign debt, euro zone banks had actually increased their holdings of sovereign bonds since the crisis.
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