Sovereign exposure limits

The regulatory treatment of banks’ sovereign exposures in the euro area is a significant issue for the possible strengthening of Europe’s banking union project, as a so-called “risk-reduction” counterpart to possible risk-sharing measures such as the creation of a European Deposit Insurance Scheme (EDIS). But unlike for EDIS and other relevant matters, there has been only limited public discussion of how to address sovereign exposures, and discussions held in the ECOFIN format in 2016 have not led to a consensus position. Work on sovereign exposures is ongoing within the Basel Committee, but it is also clear that this challenge has unique features within the euro area.

This event will aim at brainstorming and clarifying issues of feasibility and impact, with a focus on a proposal for sovereign exposure limits that would be uniform across euro-area member states and would not involve capital charges on moderate exposures. We will discuss this both from a prudential perspective, and from the perspective of possible implications for sovereign debt market dynamics and fiscal policy.

This is an invitation-only event open only to Bruegel members and to a small number of invited experts. 

This event will be off  the record.