The design of lender-of-last-resort interventions can exacerbate the bank-sovereign nexus. During sovereign crises …, central bank provision of long-term liquidity incentivizes banks to purchase high yield eligible collateral securities … matching the maturity of the central bank loans. Using unique security level data, we find that the European Central Bank's 3 …

We study the vulnerability of 130 banks directly supervised by the European Central Bank's Single Supervisory Mechanism … healthier segments of the economy. But instead of emphasising bank recapitalisation, as in past years, we believe the task is to …