In the case of sovereign risk, there is no denying that its perception by the markets continues to be influenced today by fears – unfounded, in our opinion – concerning the euro’s resilience. It would be a mistake to base any assessment of the riskiness of sovereign exposures on this perception, thereby implicitly sharing it.
Banking union is part of a broader strategy aimed at reassuring the markets about the irreversibility of the euro, and the assessment exercise is key to achieving this objective; we cannot risk fuelling the very fears we wish to dispel. At the same time there must be full transparency regarding the composition of banks’ assets.