By contrast, eurozone banks have almost stood still on both indicators.

By contrast, eurozone banks have almost stood still on both indicators.

Losses that eurozone banks would suffer would be manageable if the banks were properly and aggressively recapitalized.

The IMF estimated that U.S. banks were about 60 percent through their losses, but British and eurozone banks only 40 percent.

But the Commission believes that it should cover all 6,000 banks in the eurozone.

Broad coverage All banks in the eurozone will be covered by the new European supervisory system.

Some member states favor restricting European supervision to systemically important banks. But the Commission believes that it should cover all 6,000 banks in the eurozone.

The Commission s proposal confers powers on the ECB for the supervision of all banks in the eurozone.

Many eurozone banks have made far less progress in strengthening their capital adequacy and liquidity than have American and British banks since the financial crisis erupted.

And, because eurozone banks hold a substantial part of their assets in the form of eurozone sovereign bonds, the sovereign debt crisis became a potential banking crisis, worsened by banks other losses, owing, for example, to the collapse of housing prices in Spain.

Many banks in Serbia and other transition countries in Europe rely heavily on funding from their eurozone parent institutions.

Indeed, sovereigns are dumping a larger fraction of their public debt onto banks balance sheet, especially in the eurozone.

Appropriate use of official resources, including for recapitalization of eurozone banks, would be needed to limit collateral damage and contagion.

Eurozone

Greece s banks will be pushed to the point of failure, making the costs of saving Greece and the eurozone prohibitively high.

If eurozone growth wildly outperforms expectations in the next few years, banks balance sheets would strengthen and German taxpayers pockets would deepen.

But, according to Noyer, such a move would not work in the eurozone, where banks profits depend largely on their risky activities.

If a gradual process of disintegration eventually makes a eurozone breakup unavoidable, the path chosen by Germany and the ECB large scale financing for the eurozone periphery would destroy the core central banks balance sheets.

As investors reduce their exposure to the eurozone periphery s sovereigns, banks, and corporations, both flow and stock imbalances will need to be financed.

In 2010 2012, by contrast, systemically important European banks were exposed, raising the risk of a domino effect that threatened the entire eurozone.

At the same time, the best way to contain financial contagion would be to implement a pan European plan to recapitalize eurozone banks.

How could a eurozone supervisor be based outside the eurozone?

On June 29, European heads of state and government committed themselves to the creation of a single European supervisor for banks in the eurozone.

But, since the onset of the global financial crisis, eurozone based banks subsidiaries in emerging Europe have been reducing their exposure to the region.

But, in the second half of 2011, the eurozone based parent banks that dominate emerging Europe s banking sector came under renewed pressure to deleverage.

Regardless of what Greece does, eurozone banks now need to be rapidly recapitalized, which requires a new EU wide program of direct capital injections.

Because many banks hold a large volume of eurozone government debt, the results will depend very much on how the ECB assesses sovereign risk.

Rebalancing the Eurozone

Demokratisasi di Eurozone

The Commission s proposal confers powers on the ECB for the supervision of all banks in the eurozone. For non eurozone countries, the proposals provide for a mechanism to join on a voluntary basis and submit to the ECB s authority.

Third, to restore credit growth, eurozone banks and banking systems that are under capitalized should be strengthened with public financing in a European Union wide program. To avoid an additional credit crunch as banks deleverage, banks should be given some short term forbearance on capital and liquidity requirements.

That is why continuing uncertainty about the integrity of the eurozone, and the value of its members sovereign debt, is proving so damaging to its banks.

The ECB s Governing Council comprises the six members of the Executive Board plus the governors presidents of the 16 national central banks of the eurozone countries.

Commercial banks found it advantageous to accumulate weaker countries bonds to earn a few extra basis points, which caused interest rates to converge across the eurozone.

Even the periphery of the eurozone is benefiting from the wall of liquidity unleashed by the Fed, the Bank of Japan, and other major central banks.

Third, to restore credit growth, eurozone banks and banking systems that are under capitalized should be strengthened with public financing in a European Union wide program.

Commercial banks found it advantageous to accumulate weaker countries bonds to earn a few extra basis points, which caused interest rates to converge across the eurozone.

Down with the Eurozone

London vs. the Eurozone

Sustaining the Unsustainable Eurozone

Unlike commercial banks and retail banks, investment banks do not take deposits.

70 of France s public debt creditors banks, pension funds, insurance companies, and sovereign funds are non resident. Many of these foreign creditors, however, reside within the eurozone.

Banks.

Banks

Banks