Equities

Reuters reveals ECB preparing 'bad bank' plan for wave of coronavirus toxic debt; market reacts

Reuters reveals ECB preparing 'bad bank' plan for wave of coronavirus toxic debt; market reacts

Reuters exclusively reported that European Central Bank officials were drawing up a scheme to cope with potentially hundreds of billions of euros in unpaid loans due to the coronavirus crisis. The project, which comes as Europe mobilizes trillions of euros to bolster the region’s economy, is aimed at shielding commercial banks from any second fallout from the crisis, if rising unemployment chokes off the income needed to repay loans. According to a Reuters source, the ECB had set up a task force to look at the idea of a “bad bank” to warehouse unpaid euro debt and that work on the scheme had accelerated in recent weeks.