Time Bomb? Banks Pressured to Buy Government Debt

Jun 03, 2012 by

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Regulators are allowing banks to escape counting their country’s debt against capital requirements and loosening other rules to create a steady market for government bonds, the study says.

 

While that helps governments issue more and more debt, the strategy could ultimately explode if the governments are unable to make the bond payments, leaving the banks with billions of toxic debt, says Citigroup strategist Hans Lorenzen.

Time Bomb? Banks Pressured to Buy Government Debt

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