April 12, 2016 – Share Radio aired an interview with SEP Senior Fellow Lorenzo Codogno, in which he discussed Atlas (Atlante), the backstop fund proposed in Italy to deal with NPLs. When asked about the criticism that schemes to help weak banks are not in the interest of the public, he argues that shareholders have already borne the brunt of the losses. Due to recapitalization, the value of most shares have already been diluted to next to nothing. However, a systemic problem is currently threatening the entire banking system, and it needs to be solved quickly. This fund is designed to do so, while respecting all EU rules. Given, there have been complaints by bankers who have been strong-armed into funding this initiative. However, the more investors Atlas can attract and the more money goes into it, there more effective it is likely to be. Moral suasion on the government’s part is inevitable since everybody needs to be on board, but all players have a stake in the system, so it is in their interest to participate.
- The original interview is available from Share Radio.