Zones of scepticism, Indian Express, 8 December 2011

On December 9th Eurozone will attempt to find a
solution to the deepening banking and fiscal crisis in Europe. Many
believe that liquidity provision may provide a short term solution,
but the deeper problem of solvency of many governments will
remain. Borrowing by governments and lending by banks often has a
strong overlap. This relationship has a long history in India. In
the light of the problems of Europe, it is important to look at this
intimate connection with fresh skepticism, and worry about
distancing bank assets from government bonds. Holding risk free
government bonds, a practice Basle norms encouraged for banks, has,
as it has turned out, encouraged governments to borrow
imprudently.