A senior official of the European Central Bank (ECB) said that there is no need for concern over a potential banking crisis in the Eurozone. Ignazio Angeloni is a member of the unit tasked with supervising the largest banks in the Eurozone – 129 banks in total. Speaking at an event in Milan, he went on to say that the system has been rigorously built and tested to ensure that such a scenario won’t occur. He stated that what could happen at worst, would be some lenders could be troubled, but not enough to affect the entire region. One of such banks is Deutsche Bank, currently battling a $14 billion fine from U.S. authorities. This has added extra complications in Europe, with uncertainty still surrounding the impact of the Brexit vote. This is besides the €900 billion worth of bad loans that banks need to pay as an aftermath of the banking crash eight years ago.
“There are individual cases of banks with problems, but the system is solid,” Angeloni said at the event. “There are supervisory and financial tools to deal with specific situations. We don’t see the preconditions for a systemic crisis.” Angeloni went on to say that “We must be aware that the solution, even for banks where the problem is more acute, can’t be very fast. But precisely because it is a long process, it should start right away.” One of the solutions he mentioned might be the unconfirmed reports that the ECB is working on improvements to its quantitative easing programme. As of now, it is unclear which party will be more affected by Brexit – the United Kingdom or Europe. Negotiations are still underway, but it is unlikely that both parties will come out unscathed. The severity of the fallout is what the ECB and the UK are trying to curtail.