ECB’s Twin Tests: Big Banks and Deflation
It’s ready to flex some muscles. The European Central Bank is giving its 130 biggest financial institutions until the week’s end to agree to higher levels of capital reserves or else appeal those stricter debt-to-equity ratios. Just last week, Spain’s Santander was forced to sell off $8.86 billion in shares to shore up its capital position. Meanwhile, the ECB pivots to another big showdown on Jan. 22, when it’s expected to approve a monstrous bond-buying program to avert a deflationary spiral.