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reason why talk about the European debt crisis escalation could trigger a European banking crisis, because the Greek debt default risk has risen to 98 percent, dragged down in Portugal, Italy and other countries credit default swap prices also soared to record levels . Credit default swaps as insurance against default of a financial asset, Greece and other countries, bond yields have soared, which means the future of Greece and other countries defaulting on its debt may be an inevitable event ", that is, Greece government bonds will likely face the risk of depreciation.
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In fact, this scene has begun to preview. It is precisely because the French bank holds a large number of Greek sovereign bonds, to become a few days ago, Moody's lowered the French bank Societe Generale and Credit Agricole ratings, and BNP Paribas included in the main assessment of one of the reasons for the negative watch list. Among them, the Industrial Bank debt and savings rating dropped from Aa2 to Aa3 by long-term debt rating outlook to negative; French agricultural credit bank financial strength rating from C + down to C, the long-term debt and savings rating from Aa1 to be reduced to s Aa2. Bank for International Settlements (BIS) also said that Greek debt crisis for the French industry as a whole to bear the highest risk. If the future of the European countries, mainly Germany and France, the Bank is unable to absorb the potential losses that may be brought about by the debt crisis of Greece, Portugal and Ireland, also bound to encounter the other rating agencies as Moody's ratings continued to drift lower risk, the debt crisis may spread to the euro area core countries from the periphery countries of the euro area, which dealt a severe blow to the global investors' confidence in investing in European banks. This is also the recent European bank shares plunge one important reason.
of course, to avoid this potential European banking crisis World Pipe network informed, the most fundamental countermeasures or to tighten fiscal policy to strengthen fiscal discipline in the euro area, by reducing the budget deficit and its share of GDP, this gradually get rid of the debt crisis, although it may inhibit the pace of economic recovery in Europe.
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In the author's observation, in order to avoid the debt crisis in Europe to further upgrade and evolve into the European banking crisis, the first is to ask the European banks must seek financing on the capital market activities, in order to compensate for the lack of bank capital, the European The banks have the strength to withstand the adverse effects of future potential losses caused by devaluation of Greece and other countries bonds and economic growth slowed down. However, since the debt crisis in Europe since the outbreak of mutual suspicion and resentment between the European governments and banks, the European debt crisis escalating to produce negative effects, in particular, Moody's lowered the rating of two large French bank, to open a European bank time window was downgraded to these factors is bound to worsen the future financing of the European banking environment, the possibility of trying to obtain financing from capital markets to add greater uncertainty to the European banks, which will jeopardize the refinancing and liquidity of European banks risk. However, European banks should be from the capital market rather than the first from the government to obtain funds, which is to resolve the second-best options for European banks due to the debt crisis in Europe could face a banking crisis. complexity and seriousness of the
Europe debt crisis has greatly exceeded the expectations of the market, especially with the recent market expectations of the Greek debt default or hard to avoid triggering a debt crisis in Europe once again to upgrade. In my opinion, Europe is facing a serious challenge - Europe debt crisis escalates or trigger a European banking crisis and the international financial market turmoil.
no wonder IMF Managing Director Lagarde has warned that the European banking sector there are at least € 200 billion capital shortfall, if Europe does not take effective measures to recapitalize the banks, the escalating crisis of the European debt will be completely exposed to the European banking industry is facing huge risk, making it unable to cope with potential losses caused by devaluation of Greece and other countries bonds, which will trigger a European banking crisis, caused by the turbulent global financial markets, the danger may be greater than the collapse of Lehman Brothers induced international financial crisis.
but European banks have the habit of mutual holding sovereign debt, such as German and French banks hold large amounts of euro area member states national debt. According to IMF statistics, as of the end of March, in addition to the Greek domestic banks, German banks hold Greek government bonds amounted to $ 14.1 billion, the Bank of France holds a $ 13.4 billion. Once the bonds of Greece and other countries the risk of default, the value of these bonds will be devalued, and holding of an increased risk of these bonds is bound to bring greater pressure for European banks to replenish capital, which may lead to the European banking industry is facing liquidity fully tightened or a liquidity crisis and even lead to serious losses of European banks.
Therefore, we should clearly recognize that the European debt crisis will further evolve into the European banking crisis, once the European banking crisis, global financial markets to produce a "domino effect & rdquo ;, caused by the turbulent global financial markets, endanger the solution of the debt crisis in Europe and Europe's economic recovery. In view of the crisis of the eurozone governments world pie network information , the European debt crisis is not just a "runs", it may be a "runs" of Europe's banking crisis.