To date, transfers of these assets have been possible in just a few cases and at very low prices, incorporating not only normal management costs and the risks of the underlying assets, but also the uncertain economic outlook for the country. Banks must liquidate their non-performing loans in order to raise funds to finance the real economy.
Direct state intervention – within a framework whereby, in accordance with European rules on competition, banks participate fully in the costs of the operation and public support is suitably remunerated – could be used not to remedy excessive risk taking by single banks, but to respond to the deterioration in loan quality caused by the severity and length of the recession and to the need to ensure an adequate flow of financing to the economy.