Viewpoints
Opinion

Systemic Risk in European Banks

Systemic Risk in European Banks
The logo of Deutsche Bank on one of its branches in Frankfurt am Main, western Germany, on Feb. 4, 2021. Armando Babani/AFP via Getty Images
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Commentary

Negative interest rates and quantitative easing have wrecked the economic system. Negative interest rates destroy the profitable portion of a bank’s asset base, and no amount of cost-cutting or efficiency initiatives can compensate for this loss. Furthermore, persistent quantitative easing has transformed the investment side of the balance sheet into a ticking bomb.

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