Excluding the Eurosystem Sample Clauses

Excluding the Eurosystem. 2) Share of cross-border intra-Euro-Area positions in sum of cross-border intra-Euro-Area and domestic positions. Source: ECB This increasing market fragmentation witnesses the profound crisis of confidence in European financial markets. In addition, political and regulatory incentives have prompted banks to scale back foreign activities. European Union state aid procedures require banks to closure foreign affiliates (European Commission, 2009; Xxxxxx and Blaschczok, 2012). Political pressure not to impair the provision of loans for the respective domestic economy might have played a role as well. The volume of non-performing loans has increased sharply during the crisis (Figure 5). Banks that are encumbered by non-performing loans cannot adequately support the necessary structural adjustments in the real economy. The threat is a Japanese scenario in which for many years unsolved problems in the banking sector impede both investments and growth (German Council of Economic Experts, 2012a). Legacy assets are a problem not only because of their level but also because of uncertainty surrounding the valuation of banks’ assets during the crisis. Weak and hesitant national supervisors have created significant uncertainty about the true valuation of banks’ assets, thus impeding banks’ access to external finance as tools for ex post risk-sharing. Many banks in the crisis countries have lost access to international financial markets, and countries have experienced a sudden stop and reversal of international capital flows. Figure 5 Xxxxx' non-performing loans in selected countries1) as a ratio of gross loans % % Greece Italy Portugal France2) Germany 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Spain Ireland 20 20 18 18 2 2 0 0