Banks’ $2.7 Trillion Debt Habit Will Be Curbed, Nouy Says

The days of European lenders being allowed to load up on government debt without having to account for risk are numbered, according to Daniele Nouy, the euro area’s top bank supervisor.

A regulatory loophole that allows banks to apply a zero risk weight to much of their government debt holdings and avoid any capital charge should be closed, said Nouy, who heads the European Central Bank’s oversight arm.