A Strategy for Resolving Europe's Problem Loans
Author:
Mr. Shekhar Aiyar
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Mr. Wolfgang Bergthaler
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Jose M Garrido null

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Ms. Anna Ilyina
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Andreas Jobst
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Mr. Kenneth H Kang
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Dmitriy Kovtun
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Ms. Yan Liu
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Mr. Dermot Monaghan
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Ms. Marina Moretti
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Europe’s banking system is weighed down by high levels of non-performing loans (NPLs), which are holding down credit growth and economic activity. This discussion note uses a new survey of European country authorities and banks to examine the structural obstacles that discourage banks from addressing their problem loans. A three pillared strategy is advocated to remedy the situation, comprising: (i) tightened supervisory policies, (ii) insolvency reforms, and (iii) the development of distressed debt markets.
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Staff Discussion Notes