While the European Central Bank’s (ECB) adjustments to acceptable collateral and other tweaks have been useful, what really needs to happen is a significant and competitive move by the EU that does two things: fixes some big flaws of balance sheet regulation and takes care of the still-ongoing problem of non-performing loans. Without this two-step, Europe’s recession from the coronavirus will be longer and painful than in many other jurisdictions. This could turn the 2020s into a lost decade of financial growth for the Continent.
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