This objective ought to be pursued gradually, as the President of the ECB and the Chair of the Supervisory Board have reiterated on more than one occasion. In the last few days the private sector has started work on an important initiative, known as the “Atlante Fund”, to provide insurance against systemic risks and facilitate the reduction of the large stock of bad debts.
This would mainly be done by ensuring that unfavourable market conditions do not preclude access to the capital market on the part of banks that have already decided on such interventions. Moreover, the fund could purchase securities issued as part of bad debts securitizations, thus reducing their volume without weighing too heavily on banks’ balance sheets.