Capital increase in banks signals crisis

The European Central Bank (ECB) has reportedly pressed national central banks to increase its basic capital. The idea is to hedge against possible losses due to the purchase of national bonds from Greece, Ireland and Portugal. The left-liberal daily Süddeutsche Zeitung sees this as a sign of the seriousness of the debt crisis: "In an unusual and controversial step, the ECB has bought massive amounts of bonds from ailing Eurozone countries, a move sharply criticised by Federal Bank President Axel Weber. This call for capital increase is an indication that the central bankers are worried about these very bonds, and maybe even about national bankruptcy. The situation is serious. And the move of the Central Bank will confirm some speculations that no one really knows just how serious it is. ... Instead of resorting to the rescue mode, it would be far better if the Eurozone partners finally got together. This would bring an end to the wishful thinking. But it would also mean the German government would have to reinterpret its leadership role in Europe."

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