Yet problems can also flow in the  BIS central bankers’ speeches  3  opposite direction: shaky public finances can cause difficulties for banks. Greece is a case in point. This kind of contagion is mainly caused by government bonds held on bank balance sheets. And many banks have large holdings of domestic government bonds, especially in the euro area.
Take Italy and Spain, for example. Current figures show that Italian banks hold more than 10% of all bonds issued by the Italian public sector, and that Spanish banks hold almost 9% of Spanish public bonds.