Daniele Nouy, the Eurozone’s new chief banking regulator, warned that weak banks should be allowed to fail following upcoming ECB’s stress tests.
In her first interview since being appointed chief of the Single Supervisory Mechanism, Ms. Nouy signaled that, as part of the EU’s banking system stabilization, it is necessary “to accept that some banks have no future”.
Following the views of Mario Draghi, the president of the European Central Bank, she recognized that some institutions will have to fail for the ECB’s upcoming health check to be credible.
Shifting the financial costs of failed banks away from sovereign governments will also be a priority in Ms. Nouy tougher approach to the supervision across the Eurozone. Ms. Nouy stated that weakening the link between governments and banks – often pointed out as being a root cause of the region’s crisis - by breaking with tradition and demanding lenders to hold capital against their sovereign assets, is at the top of her agenda.
Please read the complete interview in Financial Times here.