ECB Preparing for Role as Banking Watchdog

The euro zone’s banks look set to try and raise more funds to help them meet stricter laws and capital limits, as the European Central Bank prepares to take on the role of the region’s banking watchdog.

The future of the euro zone’s banks will be shaped by the new ECB rules, announced Wednesday morning. The region’s most important banks will have to undergo an assessment of their risky assets, the quality of their balance sheets, and the amount of capital they hold.

Under the new regulations, euro area banks will have to hold capital equivalent to 8 percent of their risk-weighted assets to protect them from further economic shocks.


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