Banks will need to hold more capital against the same loan book so profitability will probably decline, the Bundesbank president says.
One of the major concerns overhanging the euro in addition to Greece is the weak state of the European banking system. European banks have not recapitalized to anywhere near the extent as US and UK banks and are very vulnerable to further economic weakness.
EUR/USD continues to hold below the 1.3540 level, topping out so far at 1.3539 on EBS during the NY session. We trade now at 1.3510.
