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Italy against German proposal of regulating sovereign holdings in banks

Kitco News

BRUSSELS (Reuters) - Italy is opposed to Germany’s proposal of limiting the exposure of euro zone banks to debt of a single sovereign and believes the discussion should instead be on creating a European safe asset, Italy’s Economy Minister Roberto Gualtieri said.

Gualtieri said the risk weights and concentration limits on bonds of a single government proposed by German Finance Minister Olaf Scholz, would put European banks at a competitive disadvantage compared to banks elsewhere in the world.

“I welcome the proposal and many aspects related to completion of banking union. On some of the aspects, including on prudential treatment of sovereign exposures, our positions are different,” Gualtieri said.

“This is a measure that would have a negative impact also at the international level, the Basel committee has not called for this modification of prudential treatment so that would create a not level playing field at the global level,” he said.

“We do not think this is a condition appropriate for the completion of the banking union and should be looped more in the context of a European safe asset,” he said.

Reporting By Jan Strupczewski, Francesco Guarascio and Marine Strauss

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