Europe's Banks Can't Do Draghi's Bidding

Bank customers are cautious, margins are squeezed and defenses weak.

Gathering clouds.

Photographer: Alessia Pierdomenico/Bloomberg

At the core of the European Central Bank's latest round of stimulus is a simple bet: that Europe's stress-tested banks can be nudged into increased lending. But what if the banks aren't nearly as healthy as ECB chief Mario Draghi insists? And what if companies don't want to borrow or depositors prove more fickle?

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