Bank loans

It's Payback Time

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European Central Bank head Mario Draghi wants banks to get their money back, fast.
  • Why it matters

    Why it matters

    Europe’s banking system cannot fully recover until its bad loans are sorted out.

  • Facts

    Facts

    • European banks have €1.9 trillion ($2.06 trillion) in unwanted financial assets, including €1.2 trillion in bad loans.
    • Experts estimate that it will take another 20 years to process the bad loans at the current rate.
    • The European Central Bank has made addressing bad loans a priority.
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    Audio

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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.

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