EU Stress Tests Exclude Possibility Of Sovereign Deault

The euro tumbled against the dollar Friday as details of the European bank stress tests were reported this morning. In sharp focus was the treatment of sovereign debt held by European banks. The stress tests exclude the possibility of a sovereign default. They don’t require any haircuts for sovereign debt classified as “hold to maturity,” assuming only the possibility of losses due to sovereign debt held in trading portfolios – CNBC

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