A radical cure for Italy’s banking problems: A combination of good banks and soft bail-in

Abstract:

Italian banks are in a precarious situation, burdened by non-performing loans (NPLs) that are almost of the same magnitude as their capital and provisions.

The gradual approach of dealing with NPLs via more provisioning and some sales has yielded little results. The political crisis now gives an opening to the authorities to take radical steps to put the Italian banking system on a sound footing.

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