In this video, we're talking about Europe's sovereign-bank doom loop. During the sovereign debt crisis between 2010-2012, it was noted that publicly-owned, recently bailed-out and poorly capitalized banks in stressed Euro Area countries reacted to sovereign stress by increasing their holdings in domestic Government bonds. These banks exhibited higher solvency risk, sharp reductions in lending activity and a tendency to increase loan interest rates more than other banks.

Moreover, in normal times, Euro Area banks tend to own between 20-30% of outstanding domestic Government debt! European banking regulations incentivize banks to invest in Government debt. Banks, particularly in stressed countries, exhibit a home bias towards domestic Government debt. However, this relationship between banks and the domestic sovereign can lead to catastrophic outcomes in times of sovereign and/or bank stress. This is what's referred to as the sovereign-bank doom loop.

Why Banks Own Sovereign Debt 0:00
Sovereign-Bank Doom Loop 4:00
Bank Characteristics 8:14
Solutions & Conclusion 11:36

Start Saving Today 💰
► Try out Raisin Bank*: https://raisin-ie.pxf.io/R5y4JR
► Try out Trade Republic*: http://trade.re/dama

Start Investing Today 📈
► Try out Trading 212*: http://www.trading212.com/invite/11QS...
► Try out Trade Republic*: http://trade.re/dama
► Try out DEGIRO*: https://bit.ly/3wHqsmQ

Stay Informed Like Me 💡
► Seeking Alpha*: https://www.sahg6dtr.com/2P9J9R/R74QP/

Playlists 🎥
► Housing:    • Housing  
► ETFs & Index Funds:    • ETFs & Index Funds  
► Taxation:    • Taxation  
► Brokerage Platforms:    • Brokerage Platforms  
► Pensions & Retirement:    • Pensions & Retirement  

Socials 📸
► Instagram:   / malone_financial  
► TikTok:   / malonefinancial  
► Facebook:   / malonefinancial  
► LinkedIn:   / malone-financial  

*Malone Financial is affiliated with the aforementioned companies. Malone Financial receives a commission for any customer conversions realized via the affiliate links. This video includes my own opinions (which do not reflect the opinions of said companies). Investing involves a risk of loss. Nothing mentioned in this video should be construed as financial advice.