Call for eurozone risk-share fund

A eurozone risk-sharing fund, combined with a credible resolution regime, is needed to break the link between member states and their banking systems, according to Central Bank chief economist Lars Frisell.

He called for “a common eurozone backstop that can supply banks with both capital and liquidity without feeding the sovereigns’ vicious debt circle”.

“Importantly, the equity and debt supplied in this manner does not need to be subsidised, but they have to be provided at terms compatible with a long-term view of the sovereigns,” said Mr Frisell.