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He said that with no control over monetary policy, an indebted country would be left few options to respond to a future financial shock because it would have little flexibility on spending and tax measures.
For example, the European Stability Mechanism was established in 2012 as an intergovernmental agency under public international law (but not under the EU law) against any future financial shock by the Eurozone members (Christova, 2011).
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And it warned that these groups are ill-prepared for future financial shocks or rises in interest rates.
With the debt crisis accelerating, European authorities forced banks to increase their capital reserves last year to protect against future financial shocks.
Already, many firms including HSBC and Deutsche Bank have been shedding assets in recent years in a bid to increase their capital reserves to protect against future financial shocks.
The push by Commerzbank follows similar moves by other European lenders, which have come under growing regulatory pressure to increase capital reserves to protect against future financial shocks.
With the debt crisis accelerating, European authorities required banks to increase their capital reserves last year to protect against future financial shocks.
Open data is no defence against future financial shocks or banking crises, said Villeroy de Galhau at the inauguration of the new facility.
The rules include requiring major international banks to hold as much as 9 percent in high-quality capital like stock or retained earnings to guard against potential future financial shocks.
Start online, where there's plenty of free debt advice, and then head to debt charities such as Citizens Advice, which can help you reorganise your money to avoid future financial shocks.
Such moves would reduce those institutions' much-needed retail deposits at a time when banks across the Continent are being required to raise their capital reserves in case of future financial shocks.
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