Brussels, 15/04/2016 (Agence Europe) - In Amsterdam on Friday 22 April, the Dutch Presidency of the Council of the EU will sound out the financial decision-makers on the options they recommend for the regulatory treatment of banks' exposure to sovereign debts, in the framework of the work on Banking Union in the Eurozone, providing for a reduction and sharing of the financial risks (see EUROPE 11507).
These options include the possibility of making no changes to the current rules, which argue that banks' exposure to sovereign debt carries no risk, according to a Dutch document based on the work of Council experts and of which EUROPE has had sight. A further option would be to lay down guidelines for supervision and bring in increased publication requirements.
Other, more radical, options would be to take the view that exposure to sovereign debt is not without its risks, by introducing low and weighted risks which would bring about increased own-funds requirements. Another option is to bring in a maximum limit for exposure to sovereign debt, the preferred idea of the President of the Eurogroup, Jeroen Dijsselbloem (see EUROPE 11471). The Dutch Presidency is also considering a 'hybrid' option, combining these two more intrusive options.
As it would have to take account of the reflection underway at international level, any initiative in this area would have to lay down interim provisions to accompany banks, which would have to increase their capital level and ensure a gentle evolution of the sovereign debt market whilst avoiding excessive movements of divestments of sovereign debt on the markets. (Original version in French by Mathieu Bion)