Crunch time for Europe's banks

Do you honestly believe that European currency experiment, intended to secure the blessings of peace for generations, will die quietly without intense support from its designers? Let me suggest the outcome right now - PASSED. Expect the same amount of diligence, transparency, and lack of bias (wink-wink) displayed by the U.S. stress test in 2009. The market will rally not because of the results of the stress test but rather anticipation of further currency debasement. Granted, investors will always act based on a reality that suits their interest, but it’s the understanding that allows them to complete (or time) the transaction from purchase to sale.

Europe’s attempt to restore confidence in its banks comes to a head on Friday with widespread expectation that up to 10 lenders will fail the exam and have to raise capital.

Regulators have been looking at how banks would withstand another recession in an exercise similar to one in the United States last year which helped restore bank sector confidence.

Source: theglobeandmail.com