Anyone watching recent developments in European banking supervision could easily become cynical.
On the one hand, Germany’s HSH Nordbank, which was hit badly by the 2008 financial crisis, is being pressed by the European Central Bank to process its collection of non-performing loans more quickly.
On the other, the financial institutions groaning under an even larger mountain of bad debt in Greece are described as “solvent and liquid,” even when they have closed, and therefore require no action.
Schizophrenia? It’s just a bow to the absurd reality of an ill-constructed euro zone. Yet the politically motivated use of double standards for measurement shouldn’t blind us to one fact: In addressing bad loans of European banks, the ECB has taken on a critically important task for the continent.