European banks will be forced to write down the value of their holdings of government bonds and raise perhaps hundreds of billions of dollars in additional capital under plans intended to quell the euro region’s financial crisis.
The plan, outlined Wednesday by the European Commission, marks a direct acknowledgment that the government bonds purchased by banks as safe, low-risk investments are in some cases not worth what was paid. Recognizing that means banks will need more capital to absorb potential losses, and European officials — after skirting the issue for months — on Wednesday said the euro area’s financial system cannot be fixed otherwise.
For more: Europe moves ahead on debt-crisis plan requiring banks to raise more capital - The Washington Post
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