To be sure, looking at the euro area as an aggregate, and comparing the euro area with its major global partners, the fiscal problem appear relatively modest. Next year, the average Euro area budget deficit will be in the order of 4.6%. By 2012 it is expected to decline further to 3.9% (Source EC Autumn 2010 economic forecast).
These loans run serious risks the coming years, and banks need to manage this risk. In doing so, by the way, they will discover, indeed they of course already have, that there are also ample and sound business opportunities to help their clients meet these legislative deadlines, thus creating a win win situation for business and climate. But that’s not all.