The European Central Bank’s top supervisor said “good bankruptcy laws” across Europe are imperative to solving the bloc’s problem of nonperforming loans, The Wall Street Journal reported yesterday. Daniele Nouy said she has “put a lot of hope” in work being carried out by the EU to harmonize bankruptcy laws to provide clarity for investors seeking to buy nonperforming corporate debt and to build a strong capital markets union. The European Commission, the EU’s executive arm, said in September it was pushing forward plans to tackle diverging national insolvency laws. European banking officials and policy makers often cite diverse rules around bankruptcy as a hindrance to cross-border investment. ECB officials add that bad loans are preventing lenders from passing on ultralow interest rates to consumers and businesses. The ECB published new proposals in September aimed at forcing eurozone banks to deal with bad debt. A consultation on the new guidelines ended Monday.
