New pressures are being exerted on European banks as bonds fail to find investors. As a sign of the deepening crisis in Europe (and with the European Central Bank acting cautiously), nations such as Italy and Portugal are looking to their own national banks to take on government debt.
Italy has taken to extreme measures, even enlisting their national football (soccer) teams to promote the purchase of Italian bonds. Bonds are essential to keeping governments afloat and functioning. Recently, governments in Europe have had to offer interest rates as high as 7 percent in some countries to get investors interested in government bonds.
In this latest move, and with investors wary of taking on more European debt, national governments are looking to their own national banks as "lenders of last resort," reports the Wall Street Journal and Reuters. Ironically, this comes at a time when these same banks are under pressure to cut their debt loads.
What will happen to the Euro? Can it survive? The markets seem to be preparing for a worse case scenarioÂ—a return to national currencies. In the meantime, nations hope that this new move will help ease some pressure.
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