4/6  BIS central bankers' speeches  Another lesson regards the debate that has intensified in the aftermath of the sovereign debt crisis about the so-called “bank-sovereign nexus” (or “doom loop”). Some have proposed that the prudential treatment of banks’ sovereign exposures be made more restrictive.
These recommendations are built on the premise that a capital requirement or the assignment of a risk charge would break the link between banks and the State. But this link goes well beyond the holding of sovereign bonds.