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Breakingviews: Euro crisis 2.0 will need new shock absorber

Friday, April 04, 2014 - 03:55

April 4 - European banks kept yields down during 2010-13 by buying sovereign debt. New capital rules make this an altogether dicier affair, says Reuters Breakingviews.

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Huge crisis -- when I love you and you -- -- that's the view breaking views and George Hayes joins me now George. Just Hernandez in the loss of sending all debt by banks in what is the significance of this mean lacing into the year is in crisis that we've we've just ties. -- in 20102013. And really knows this whole thing was US and banks were following the rules of sovereign debt it's going when it was. -- most risky. Because you can't control because people were worried that the whole year isn't going to be very tough. Not a reason they were doing this is because he CB was giving them very cheap liquidity. Whitman today. -- boring nothing and the games they call yielding debt so it's a great deal for them they made money. But also was great ECB he -- his. They had people in the market. -- -- -- -- -- Sovereign bonds this weekend going out of control of the time says straight and it was an important -- the ECB to kind of remotely control what was getting known. What was saying that is that you're seeing them this week so PPI. People -- bank. And she's selling it then because they -- and and the reason to expect except for that. And it's because. Need balls all three rules mean that they get punished. If they holds. -- oh man this kind of debt homeland and Palestinians. Say the significance these. That's. Banks are not funny it much what -- I must. You report deals with so tell Vista home and bouncy. And say. In future if there is a big crisis. That when these kind of peaceful guys to help sort of opened my eyes we dined squarely ECB. That ECB has say -- and the he had -- monthly transactions and see. That we will step into audited by sovereign debt if there was a problem. If -- is getting out of control. It's. It's really it's really opens it up in the asked whether if indeed that was the Germans would get a you -- not -- But the thought of options they have Georgia I mean it was listen to draw yesterday and he said. That healthy banking system -- this jurisdiction. Is is a very important to the year -- because the unit -- can't return to growth. If the banking system isn't healthy -- old highlights. So I mean our daily they won't the ECB wants the banks to be as healthy as possible. But what's interesting matters that need international. Rules beyond -- just here. That -- -- holding sovereign debt -- but that's just the -- less attractive. And even they -- he's not going to -- to say it was very useful in the crisis to have these guys coming in and buying it. And keeping yields that and diesel could happen anymore he's will be enough that it itself. How cool them insisting virginity and -- -- -- to supplement in the prices. How all the banking community fail. If I keep communities believe them just very happy to it'll be like. Crises. -- an instrument of its policy it will -- probably. Relieved to have kind of come out of the crisis and they nickel we didn't we won't be holding these keys to the sovereign debt because ultimately is very risky thing to date. That's. I think that it probably just happy that the cross is they've the -- we're making today that if there isn't a crisis. Turkeys -- -- vehicle. Okay thanks friend I said George K is that talking about the years and what can be done. If we US have another crisis I'm nineteen along this is what is.

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Breakingviews: Euro crisis 2.0 will need new shock absorber

Friday, April 04, 2014 - 03:55